10q10k10q10k.net

What changed in Mativ Holdings, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Mativ Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+341 added−422 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in Mativ Holdings, Inc.'s 2023 10-K

341 paragraphs added · 422 removed · 234 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

62 edited+41 added−50 removed39 unchanged
Biggest changeThe Company is not aware of any regulatory compliance matters that are expected to have a material adverse effect on the Company’s business, competitive position, financial position, results of operations, capital expenditures or cash flows. 9 Environmental, Social and Governance Building long-term value for our customers, employees and stockholders includes a focus on ensuring the long-term sustainability of our business, good corporate citizenship, and contributing to our communities.
Biggest changeEnvironmental, Social and Governance Building long-term value for our customers, employees and stockholders includes a focus on ensuring the long-term sustainability of our business, good corporate citizenship, and contributing to our communities. Corporate responsibility has long been part of the Mativ corporate mission and is one of our core values.
We believe the primary basis of competition for premium fine papers are product quality, customer service, product availability, promotional support, color and texture variety, and brand recognition. The specialized nature of our papers requires extensive know-how, specialized manufacturing capabilities, high service and operational excellence, all of which limits the ability of more commodity-oriented producers from competing in our categories.
We believe the primary basis of competition for premium fine papers are product quality, customer service, product availability, promotional support, color and texture variety, and brand recognition. The specialized nature of our papers requires extensive know-how, specialized manufacturing capabilities, high service and operational excellence, all of which limits the ability of more commodity-oriented producers from competing in our categories. Seasonality.
Primary filtration applications for our media include: • water – reverse osmosis and waste water treatment • transportation – air intake, oil, fuel, and cabin air • process – fluid purification for industrial manufacturing • air – HVAC, air purification, and vapor permeation 4 Protective solutions: We manufacture our thermoplastic polyurethane films to have combinations of the following attributes: UV and scratch resistance, durability, and ultra-clarity.
Primary filtration applications for our media include: • water – reverse osmosis and waste water treatment • transportation – air intake, oil, fuel, and cabin air • process – fluid purification for industrial manufacturing • air – HVAC, air purification, and vapor permeation Protective solutions: We manufacture our thermoplastic polyurethane films to have combinations of the following attributes: UV and scratch resistance, durability, and ultra-clarity.
Our premium papers are primarily used in high-end commercial printing services, advertising collateral, stationery, corporate identity packages and brochures, direct mail, business cards, and a variety of other uses where colors, texture, coating, unique finishes, or heavier weight papers are desired.
Our premium papers are primarily used in high-end commercial printing services, advertising collateral, stationery, corporate identity packages and brochures, direct mail, business cards, and a 6 variety of other uses where colors, texture, coating, unique finishes, or heavier weight papers are desired.
We continue to look for ways to enhance the sustainability of our business and make a positive impact on the communities in which we live and serve. Governance Mativ believes good corporate governance supports long-term value creation for our stockholders.
We continue to look for ways to enhance the sustainability of our business and make a positive impact on the communities in which we live and serve. 10 Governance Mativ believes good corporate governance supports long-term value creation for our stockholders.
Our packaging and specialty papers business serves a variety of end-use customers, primarily by selling to converters and printers who are producing products to meet the needs of designers, brand owners, and other end-users. We also sell direct to consumers through major retail channels.
Our packaging and specialty papers business serves a variety of end-use customers, primarily by selling to converters and printers who are producing products to meet the needs of designers, brand owners, and other end-users. We also sell direct to consumers through major retail channels. Sales and Distribution.
We then further process our media through coating, saturating, adhesive application, and advanced converting manufacturing processes to impart specific product attributes that are valued by our customers, enhancing Mativ’s value proposition as a full solutions provider. With the growth of our ATM division, our technical expertise around the production, coating, and converting of polymer and resin-based materials is increasing.
We then further process our media through coating, saturating, adhesive application, and advanced converting manufacturing processes to impart specific product attributes that are valued by our customers, enhancing Mativ’s value proposition as a solutions provider. With the growth of our ATM segment, our technical expertise around the production, coating, and converting of polymer and resin-based materials is increasing.
Release liners : We manufacture protective substrates that aid in the separation of a product from an adhesive for a diverse set of end-use applications. Leveraging our advanced coating capabilities, these protective substrates are typically produced by applying a specialty silicone coating to various base medias (primarily paper), then sold to customers who integrated into a final end-product solution.
Release liners : We manufacture protective substrates that aid in the separation of a product from an adhesive for a diverse set of end-use applications. Leveraging our advanced coating capabilities, these protective substrates are typically produced by applying a specialty silicone coating to various base medias (primarily paper), then sold to customers who integrate them into a final end-product solution.
Advanced Technical Materials Products. We manufacture and sell a variety of highly engineered polymer, resin and fiber-based substrates, nets, films, adhesive tapes, and other nonwovens. These performance materials are often used in growing applications serving the filtration, protective solutions, release liners, and healthcare end-markets.
We manufacture and sell a variety of highly engineered polymer, resin and fiber-based substrates, nets, films, adhesive tapes, and other nonwovens. These performance materials are often used in growing applications serving the filtration, protective solutions, release liners, and healthcare end-markets.
The Governance section of the Investor Relations section of our website at www.mativ.com includes our Code of Conduct, by-laws, corporate governance guidelines, Board of Directors committee charters, as well as disclosure of any amendment to or waivers of our Code of Conduct granted to any of the principal executive officer, principal financial officer or principal accounting officer.
The Governance section of the Investors section of our website at www.mativ.com includes our Code of Conduct, by-laws, corporate governance guidelines, Board of Directors committee charters, as well as disclosure of any amendment to or waivers of our Code of Conduct granted to any of the principal executive officer, principal financial officer or principal accounting officer.
Requests for information, requests to contact our audit committee chairman, lead non-management director or the independent directors as a group, or requests to report concerns about accounting or other issues can be made in writing and sent to the Investor Relations Department at our principal executive office address listed above.
Requests for information, requests to contact our audit committee chairman, non-executive chair or the independent directors as a group, or requests to report concerns about accounting or other issues can be made in writing and sent to the Investor Relations Department at our principal executive office address listed above.
Financial information about foreign and domestic operations, contained under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 herein and in Notes 13, 14, 17 and 21 ("Restructuring and Impairment Activities," "Debt," "Income Taxes," and "Segment Information," respectively) to the Consolidated Financial Statements contained in "Financial Statements and Supplementary Data" in Part II, Item 8 herein, is incorporated by reference in this Item 1.
Financial information about foreign and domestic operations, contained under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 herein and in Notes 13, 14, 17 and 21 ("Restructuring and Other Impairment Activities," "Debt," "Income Taxes," and "Segment Information," respectively) of the Notes to Consolidated Financial Statements contained in "Financial Statements and Supplementary Data" in Part II, Item 8 herein, is incorporated by reference in this Item 1. 4 Advanced Technical Materials Products.
Although we are not aware of any environmental conditions at any of our facilities that could have a material adverse effect on our financial condition, results of operations and cash flows, we own facilities in France, the United States, and elsewhere that have been operated over the course of many decades.
Although we are not aware of any environmental conditions at any of our facilities that could have a material adverse effect on our financial condition, results of operations and cash flows, we own facilities that have been operated over the course of many decades.
Mativ and its subsidiaries manufacture on four continents, conduct business in over 100 countries and operate 47 production locations worldwide, with facilities in the United States, United Kingdom, China, Germany, France, Belgium, Poland, India, Brazil, Canada, Spain, Italy, Mexico, the Netherlands, Malaysia, and Luxembourg.
Mativ and its subsidiaries manufacture on three continents, conduct business in over 100 countries and operate 40 production locations worldwide, with offices and facilities in the United States, United Kingdom, China, Germany, France, Belgium, Poland, India, Canada, Spain, Italy, Mexico, Netherlands, Malaysia, and Luxembourg.
Our primary products include fiber and polymer based nonwoven media and thermoplastic nets that are sold to filter manufacturers who, in turn, incorporate our media in the final filter assembly.
Our primary products include fiber and polymer based nonwoven media and extruded filter elements that are sold to filter manufacturers who, in turn, incorporate our media in the final filter assembly.
"Management's Discussion and Analysis of Financial Condition and Results of Operations". In addition, selected financial data for our segments is available in Note 21. Segment Information of the Notes to Consolidated Financial Statements and a discussion regarding the risks associated with foreign operations is available in Part I, Item 1A. "Risk Factors".
Additional information regarding "Segment Performance" is included in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations". Selected financial data for our segments is available in Note 21. Segment Information of the Notes to Consolidated Financial Statements and a discussion regarding the risks associated with foreign operations is available in Part I, Item 1A.
Our quarterly earnings conference calls are typically held the morning after our quarterly earnings releases and are available through our website via a webcast. The tentative dates for our quarterly earnings conference calls related to 2023 financial results are May 4, 2023, August 10, 2023, November 9, 2023, and February 22, 2024. These dates are subject to change.
Our quarterly earnings conference calls are typically held the morning after our quarterly earnings releases and are available through our website via a webcast. The tentative dates for our quarterly earnings conference calls related to 2024 financial results are May 9, 2024, August 8, 2024, November 7, 2024, and February 20, 2025. These dates are subject to change.
Generally, the applications and customers the ATM segment serves are in growing end-markets, and as a percentage of total ATM segment net sales in 2022 were as follows: industrials – 34%, protective solutions – 22%, filtration – 21%, healthcare – 16%, and release liners – 7%. These products are highly engineered and often customized.
Generally, the applications and customers the ATM segment serves are in growing end-markets, and as a percentage of total ATM segment net sales in 2023 were as follows: industrials – 33%, filtration – 25%, healthcare – 16%, protective solutions – 16%, and release liners – 10%. These products are highly engineered and often customized.
In packaging and specialty papers, we primarily use our internal sales, marketing, and customer service organization to sell our products in a variety of channels including authorized paper distributors, converters, major national retailers, specialty business converters, and direct to end-users.
In packaging and specialty papers, we primarily use our internal sales, marketing, and customer service organization to sell our products in a variety of channels including authorized paper distributors, converters, major national retailers, specialty business converters, and direct to end-users. We typically deliver our products to customers by truck, rail and ocean-going vessels. Competition.
We consider this to be a relatively stable energy source historically; however, the geopolitical events in Russia and Ukraine have resulted in volatile energy prices in Europe as well as temporary concerns about supply of energy sources, such as natural gas, in the region. Currently, while energy prices remain elevated versus historical levels, supplies appear to be stable.
We consider these to be a relatively stable energy sources historically; however, the recent geopolitical events in various geographies in Europe and Asia have resulted in volatile energy prices in Europe as well as temporary concerns about supply of energy sources, in the region. Currently, while energy prices in Europe remain elevated versus historical levels, supplies appear to be stable.
Schertell was previously employed by Georgia-Pacific Corporation in the Consumer Products Retail division, where she served as Vice President of Sales Strategy from 2007 through 2008, and as Vice President of Customer Solutions from 2003 through 2007. Andrew Wamser was appointed Chief Financial Officer effective the date of the Merger. Mr.
Schertell was previously employed by Georgia-Pacific in the Consumer Products Retail division, where she served as Vice President of Sales Strategy from 2007 through 2008, and as Vice President of Customer Solutions from 2003 through 2007. Greg Weitzel was appointed Chief Financial Officer effective April 2, 2023. Prior to becoming Chief Financial Officer Mr.
Additional information regarding agreements for the supply of certain raw materials and energy is included in Note 20.
Additional information regarding agreements for the supply of certain raw materials and energy is included in Note 20. Commitments and Contingencies, of the Notes to Consolidated Financial Statements.
Community Initiatives • In addition to investing in area communities where our facilities are located by providing jobs and sourcing products, we support efforts to make our communities stronger through financial donations and volunteer participation.
When possible, materials are reintroduced into the manufacturing process to produce new products. Community Initiatives • In addition to investing in communities where our facilities are located by providing jobs and sourcing products, we support efforts to make our communities stronger through financial donations and volunteer participation.
ATM is comprised of the legacy SWM Advanced Materials & Structures segment and FBS is comprised of the legacy SWM Engineered Papers segment. As such, there were no changes to the historical results of these segments. The merged legacy Neenah segments have been allocated to ATM and FBS based on performance, market focus, technologies, and reporting structure.
FBS was comprised of the legacy SWM Engineered Papers segment and the legacy Neenah Fine Paper and Packaging segment. As such, there were no changes to the historical results of these segments. For both ATM and FBS, the segments were allocated based on performance, market focus, technologies, and reporting structure.
We produce a wide range of substrates at various thicknesses and with various attributes to meet the needs of our customers. Some examples of these value-added attributes include printability, color, texture, specialty finish, safety, and recycled content.
Our FBS segment primarily produces packaging and specialty paper products, using mainly natural and sustainable fibers. We produce a wide range of substrates at various thicknesses and with various attributes to meet the needs of our customers. Some examples of these value-added attributes include printability, color, texture, specialty finish, and recycled content.
Commodity grade resin prices can sometimes correlate with crude oil prices while specialty resin prices often do not. We also source synthetic fibers (distinct from the natural fibers used in our FBS segment), such as polyester, and specialty pulps, such as mercerized pulp. We have multiple sources for most of our raw material needs.
We also source synthetic fibers (distinct from the natural fibers used in our FBS segment), such as polyester, and specialty pulps, such as mercerized pulp. We have multiple sources for most of our raw material needs.
While FBS uses other specialty natural fibers, such as flax, in our operations, as well as a variety of specialty chemicals used in paper making, we believe that purchased raw materials are generally available from several sources. Paper production uses significant amounts of energy, primarily electricity, natural gas and fuel oil.
While FBS uses a variety of specialty chemicals used in paper making, we believe that purchased raw materials are generally available from multiple sources and would only create temporary disruptions as we secured supply from other sources. Paper production uses significant amounts of energy, primarily electricity and natural gas.
We are doing this by continually evolving how we attract, engage, grow, and reward our people. Safety The safety and well-being of our employees is very important to us.
We are doing this by continually evolving how we attract, engage, grow, and reward our people. Safety The safety and well-being of our employees is very important to us. We strive to reflect this core value in everything we do and are committed to continuous improvement in all aspects of our safety programs.
None of our officers were selected pursuant to any arrangement or understanding between the officer and any person other than the Company.
None of our officers were selected pursuant to any arrangement or understanding between the officer and any person other than the Company. Our executive officers serve at the discretion of the Board of Directors and are elected annually by the Board.
In addition to having complementary marketplace touch-points in key growing product categories, such as filtration, healthcare, packaging, and specialty tapes, the Company sees strong trends supporting the positive outlook of our business, such as the need for clean air and water, personal health and wellness, performance coating solutions, and sustainable alternatives.
Mativ participates in a number of key growing product categories, such as filtration, specialty tapes, release liners, specialty films, and premium packaging, with strong trends supporting the positive outlook of our business, such as the need for clean air and water, personal health and wellness, performance coating solutions, and sustainable alternatives.
The packaging we use for our own business purposes (as opposed to the packaging we sell) is not necessarily certified or derived from certified suppliers, as we often purchase from small suppliers for whom certification is cost-prohibitive. • Environmental Certification and Energy Efficiency : All 17 Mativ locations are certified to ISO 14001 for environmental management systems.
The packaging we use for our own business purposes (as opposed to the packaging we sell), and the wood pallets that we use, are not necessarily certified or derived from certified suppliers, as we often purchase from small suppliers for whom certification is cost-prohibitive. • Environmental Certification and Energy Efficiency : 11 Mativ locations are certified to ISO 14001 for environmental management systems and four locations are certified to the ISO 50001 energy management standard. • Recycling : Our facilities recycled more than 13,500 metric tons of waste in 2023.
Our manufacturing capabilities are flexible and nimble to service very specialized products at various order quantities efficiently, and our products are sold globally, though most prevalent in North America. Applications and Categories.
Our manufacturing capabilities are flexible and nimble to service very specialized products at various order quantities efficiently, and our products are sold globally, though most prevalent in North America. Applications : We are a leading supplier of premium packaging, printing, and other high-end specialty papers, predominantly in North America.
Rickheim served in the same role at Neenah since April 2020. Prior to joining Neenah, Mr. Rickheim served as the Chief Human Resources Officer for Newell Brands, Inc., where he held various roles of increasing responsibility related to HR business partnership, talent acquisition, talent development, employee engagement, inclusion & diversity and communications.
Rickheim served as the Chief Human Resources Officer for Newell Brands, Inc., where he held various roles of increasing responsibility related to HR business partnership, talent acquisition, talent development, employee engagement, inclusion & diversity and communications. Ryan Elwart was appointed Mativ's Group President of Sustainable and Adhesive Solutions Group in January 2024. Mr.
Instructions on how to listen to the webcasts and updated information on times and actual dates are available through our website at www.mativ.com . 3 DESCRIPTION OF BUSINESS Segment Financial Information . We operate and manage two reportable segments based on our product lines: ATM and FBS.
Instructions on how to listen to the webcasts and updated information on times and actual dates are available through our website at www.mativ.com . 3 DESCRIPTION OF BUSINESS Segment Financial Information . Prior to the completion of the Merger and the EP Divestiture, we operated in two reportable segments: Advanced Materials & Structures and Engineered Papers.
Combined with global manufacturing, supply chain, innovation, and material science capabilities, our broad portfolio of technologies combines polymers, fibers, and resins to optimize the performance of customers' products across multiple stages of the value chain. Mativ was incorporated in Delaware in 1995 as a wholly-owned subsidiary of Kimberly-Clark Corporation ("Kimberly-Clark").
Mativ targets premium applications across diversified and growing end-markets, from filtration to healthcare to sustainable packaging and more. 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. Mativ was incorporated in Delaware in 1995 as a wholly-owned subsidiary of Kimberly-Clark Corporation ("Kimberly-Clark").
("Miquel y Costas"), Julius Glatz GmbH ("Glatz") and PT Bukit Muria Jaya ("BMJ"). Seasonality. Generally, sales of our products are subject to seasonal fluctuations due to periodic machine downtime and typically lower order volumes in the fourth quarter. Quarterly sales fluctuations can also be influenced by inventory building and/or destocking by our customers.
Generally, sales of our products are subject to seasonal fluctuations due to periodic machine downtime and typically lower order volumes in the fourth quarter. Quarterly sales fluctuations can also be influenced by inventory building and/or destocking by our customers. Raw Materials and Energy We use a variety of resins, polymers, and synthetic fibers in our ATM products.
Our executive officers serve at the discretion of the Board of Directors and are elected annually by the Board. 11 Julie Schertell was appointed President and Chief Executive Officer effective the date of the Merger and also serves as Director. She served in the same role at Neenah since May 2020.
Julie Schertell was appointed President and Chief Executive Officer effective the date of the Merger and also serves as a director. She served in the same role at Neenah since May 2020. Prior to becoming President and Chief Executive Officer of Neenah, Ms. Schertell served as Senior Vice President, Chief Operating Officer since January 2020. Ms.
Raw Materials and Energy We use a variety of resins, polymers, and synthetic fibers in our ATM products. We source a variety of commodity-grade resins, including polypropylene and polyethylene, as well as more specialized materials such as thermoplastic polyurethane. Resin prices can fluctuate significantly and can impact profitability.
We source a variety of commodity-grade resins, including polypropylene and polyethylene, as well as more specialized materials such as thermoplastic polyurethane. Resin prices can fluctuate significantly and can impact profitability. Commodity grade resin prices can sometimes correlate with crude oil prices while specialty resin prices often do not.
We believe that energy supply is generally reliable throughout our manufacturing footprint, although prices can fluctuate significantly based on demand. We enter into agreements to procure a portion of our energy requirements for future periods to reduce the uncertainty of future energy costs. The majority of our energy requirements relate to electricity in the U.S., and Europe.
We enter into agreements to procure a portion of our energy requirements for future periods to reduce the uncertainty of future energy costs. 7 The majority of our energy requirements relate to natural gas and electricity in the U.S., and Europe.
Our FBS segment is generally more mature given its exposures to commercial print and combustibles end-markets, both of which have historically demonstrated secular volume declines. FBS continues to reposition itself by leveraging its unique manufacturing capabilities and product innovation to diversify its end-markets and enhance growth, particularly by expanding in sustainable alternatives and premium packaging.
FBS continues to reposition itself by leveraging its unique manufacturing capabilities and product innovation to diversify its end-markets and enhance growth, particularly by expanding in sustainable alternatives and premium packaging.
Using our advanced films, adhesive coating, and converting operations, our products are used in such demanding applications as wound care (both advanced technologies used in hospital settings and consumer products found in retail), medical device fixation, and consumer wellness (e.g. topical skin care and health & beauty applications).
Using our advanced films, adhesive coating, and converting operations, our products are used in such demanding applications as wound care (both advanced technologies used in hospital settings and consumer products found in retail), medical device fixation, and consumer wellness (e.g., topical skin care and health & beauty applications). 5 Industrials: We leverage a diverse array of production techniques (e.g., resin extrusion, precision coating, and saturation) to manufacture specialty products, such as extruded nets, apertured films, specialty papers, and adhesive media/tapes, which serve specialty segments of large, global categories.
Corporate responsibility has long been part of the Mativ corporate mission and is one of our core values. Our manufacturing facilities and corporate office have a longstanding tradition of community engagement and reducing our impact on the environment. We maintain our Supplier Code of Conduct and our Sustainable Forestry Policy to further align with our sustainability goals.
Our manufacturing facilities and corporate office have a longstanding tradition of community engagement and reducing our impact on the environment. We maintain our Supplier Code of Conduct, Human Rights Policy, Transparency in Supply Chains Statements and our Sustainable Forestry Policy to further align with our sustainability goals. Additional information can be found in the Ethics section at www.mativ.com .
We are dedicated to developing product innovations and improvements to meet the needs of individual customers. We believe our research and product development capabilities have played an important role in establishing our reputation for high quality, superior products in both our ATM and FBS segments.
We believe our research and product development capabilities have played an important role in establishing our reputation for high quality, superior products in both our ATM and FBS segments. Within ATM, we have a history of finding innovative design solutions, including developing products that improve the performance of customers' products and manufacturing operations.
Human Capital As of December 31, 2022, we had approximately 7,500 full-time employees, of whom approximately 3,500 employees were located in North America, 3,300 employees were located in Europe, 450 employees were located in South America, and 250 employees were located in Asia Pacific.
At December 31, 2023, Mativ owned about 755 patents and patent applications globally. Human Capital As of December 31, 2023, we had approximately 5,400 full-time employees, of whom approximately 3,150 employees were located in North America, 1,950 employees were located in Europe, and 300 employees were located in Asia Pacific.
Many of the processes used to make Mativ's products are kept as trade secrets. Mativ owns, or holds licenses to use, numerous U.S. and foreign patents. Mativ’s research and development activities generate a steady stream of inventions that are covered by new patents or trade secrets.
Intellectual Property Patents, trade secrets and trademarks are an important part of Mativ’s intellectual property. Mativ’s products are sold around the world under various trademarks. Many of the processes used to make Mativ's products are kept as trade secrets. Mativ owns, or holds licenses to use, numerous U.S. and foreign patents.
While we have brought two separate leading companies together, we have strong cultural alignment, a shared strategic vision, and a path to accelerated long-term growth. 2 AVAILABLE INFORMATION Our filings with the Securities and Exchange Commission ("SEC"), which filings include this Annual Report on Form 10-K, Proxy Statements, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all related amendments, are available, free of charge, on the SEC's website at www.sec.gov and on the Investor Relations section of our website at www.mativ.com .
Combined with a relentless pursuit of commercial excellence, deep-rooted bias for continuous improvement, on-going efforts to streamline costs, and an agile approach to execution, we feel we have a comprehensive strategy that will create long-term, sustainable value for our customers, employees, and shareholders. 2 AVAILABLE INFORMATION Our filings with the Securities and Exchange Commission ("SEC"), which filings include this Annual Report on Form 10-K, Proxy Statements, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all related amendments, are available, free of charge, on the SEC's website at www.sec.gov and on the Investor Relations section of our website at www.mativ.com .
Commitments and Contingencies, of the Notes to Consolidated Financial Statements. 7 Research and Development As of December 31, 2022, we employ approximately 140 research and development employees in research and laboratory facilities in France, Brazil, the United States, the United Kingdom, Germany, the Netherlands, Spain and Mexico.
Research and Development As of December 31, 2023, we employ approximately 170 research and development employees in research and laboratory facilities in the United States, China, France, Germany, Mexico, the Netherlands, Spain and the United Kingdom. We are dedicated to developing product innovations and improvements to meet the needs of individual customers.
Executive Officers of the Registrant The names and ages of our executive officers as of March 1, 2023, together with certain biographical information, are as follows: Name Age Position Julie Schertell 54 President and Chief Executive Officer Andrew Wamser 49 Chief Financial Officer Ricardo Nunez 58 Chief Legal Officer, Secretary and Chief Compliance Officer Mike Rickheim 48 Chief Human Resources Officer and Chief Administrative Officer Cheryl Allegri 56 Corporate Controller & Chief Accounting Officer There are no family relationships between any of the directors or any of our executive officers.
Executive Officers of the Registrant The names and ages of our executive officers as of February 29, 2024, together with certain biographical information, are as follows: Name Age Position Julie Schertell 55 President and Chief Executive Officer Greg Weitzel 52 Chief Financial Officer Mark Johnson 47 Chief Legal and Administrative Officer Mike Rickheim 49 Chief Human Resources and Communications Officer Ryan Elwart 50 Group President, Sustainable & Adhesive Solutions Christoph Stenzel 54 Group President, Filtration and Advanced Materials Andrew Downard 49 Chief Supply Chain Officer There are no family relationships between any of the directors or any of our executive officers.
Our principal executive office is located at 100 North Point Center East, Suite 600, Alpharetta, Georgia 30022-8246 and our telephone number is (800) 514-0186.
Our principal executive office is located at 100 Kimball Place, Suite 600, Alpharetta, Georgia 30009 and our telephone number is (770) 569-4229.
Training and Development Mativ recently launched MyPath, a platform that supports setting objectives, creating a culture of ongoing feedback, differentiating and rewarding individual performance, and creating global learning and development opportunities for our employees. In 2023, the Company intends to launch Employee Resource Groups ("ERGs") to connect employees through shared identity or affinity.
Additionally, employees are encouraged to identify and report workplace conditions that could lead to an injury. Training and Development Mativ launched MyPath, a platform that supports setting objectives, creating a culture of ongoing feedback, differentiating and rewarding individual performance, and creating global learning and development opportunities for our employees.
Our HVAC air filtration media can reach removal efficiencies as high as 99.9% while our ASD netting can provide up to a 20% decrease in pressure drop during Reverse Osmosis filtration, decreasing energy costs and allowing customers to provide energy efficient water filtration solutions. • Reducing Greenhouse Gas (GHG) Emissions and Supporting Air Quality : We recognize the importance of reducing our greenhouse gas (GHG) emissions and have prioritized actions to reduce our Scope 1 and Scope 2 emissions, such as the specific initiatives and equipment replacements intended to improve energy efficiency.
Our HVAC air filtration media can reach removal efficiencies as high as 99.9% while our ASD netting can provide up to a 20% decrease in pressure drop during Reverse Osmosis filtration, decreasing energy costs and allowing customers to provide energy efficient water filtration solutions. • Partnership with Planet Water Foundation : Mativ partners with Planet Water Foundation to support global efforts to improve access to clean, safe water.
Within ATM, we have a history of finding innovative design solutions, including developing products that improve the performance of customers' products and manufacturing operations. We believe our commitment to research and development, coupled with our investment in new technology and equipment, has positioned us to take advantage of growth opportunities in many places around the world.
We believe our commitment to research and development, coupled with our investment in new technology and equipment, has positioned us to take advantage of growth opportunities in many places around the world. Within FBS, our research and development has enabled us to establish and sustain leading shares in premium specialty papers while accelerating growth in the packaging space.
Ltd., 3M Company, Covestro AG, ORAFOL Europe GmbH, Hollingsworth and Vose Company, Advanced Medical Solutions Group plc, Avery Dennison, Ahlstrom-Munksjo, Mondi plc, Loparex LLC, Monadnock Paper Mills, Inc., and Potsdam Specialty Paper, Inc. We believe our ATM products compete primarily on product features, innovations and customer service across the end-markets we serve, particularly in healthcare, transportation, filtration, and release liners.
Ltd., 3M Company, Covestro AG, ORAFOL Europe GmbH, Hollingsworth and Vose Company, Advanced Medical Solutions Group plc, Avery Dennison, Ahlstrom Holding 3 Oy, Mondi plc, Loparex LLC, Monadnock Paper Mills, Inc., and Potsdam Specialty Paper, Inc.
Aspects of the Company’s operations and businesses are also subject to privacy, data security, and data protection regulations, which impact the way we use and handle data and operate our products and services.
Aspects of the Company’s operations and businesses are also subject to privacy, data security, and data protection regulations, which impact the way we use and handle data and operate our products and services. 9 The Company is not aware of any regulatory compliance matters that are expected to have a material adverse effect on the Company’s business, competitive position, financial position, results of operations, capital expenditures or cash flows.
Of the end-markets we 5 serve, industrial is generally more price competitive due to a higher portion of products we sell in this end-market with generally lower technical requirements. Fiber-Based Solutions Overview. Our FBS segment primarily produces packaging and specialty paper products, as well as engineered papers, using mainly natural and sustainable fibers.
We believe our ATM products compete primarily on product features, innovations and customer service across the end-markets we serve, particularly in healthcare, transportation, filtration, and release liners. Of the end-markets we serve, industrials is generally more price competitive due to a higher portion of products we sell in this end-market with generally lower technical requirements. Fiber-Based Solutions Overview.
In general, no single patent or group of related patents is material to the conduct of Mativ’s business as a whole or to any of Mativ’s business segments. At December 31, 2022, Mativ owned about 1,100 patents and patent applications globally.
Mativ’s research and development activities generate a steady stream of inventions that are covered by new patents or trade secrets. In general, no single patent or group of related patents is material to the conduct of Mativ’s business as a whole or to any of Mativ’s business segments.
Our premium packaging products are used for wine, spirits and beer labels, folding cartons, box wrap, bags, hang tags, and stored value cards servicing high-end retail, cosmetics, spirits, and electronics end-use markets. These papers are characterized by finishing, colors, textures and distinctive coating, which are valued by customers and incorporated into their branding and image.
We participate in premium pockets of our categories with a wide portfolio of products and specialty manufacturing that is not easily replicated by commodity paper producers. Our premium packaging products are used for wine, spirits and beer labels, folding cartons, box wrap, bags, hang tags, and stored value cards servicing high-end retail, cosmetics, spirits, and electronics end-use markets.
IMPACT, along with enhanced operator training, risk identification and proactive risk reduction strategies, is planned to be rolled out across manufacturing facilities starting in 2023. Each of our facilities maintains safety management systems designed to continuously review and improve employee safety and regulatory compliance.
We continue to optimize our robust safety systems, enhance our operator training programs, and implement proactive risk identification and risk reduction strategies. Each of our facilities maintains safety management systems designed to continuously review and improve employee safety and regulatory compliance. This includes periodic workplace safety audits, employee participation in safety 8 meetings and training, and active safety committees.
GENERAL Background On July 6, 2022, Schweitzer-Mauduit International, Inc. ("SWM") consummated its previously announced merger transaction involving Neenah, Inc. ("Neenah"). A wholly-owned subsidiary of SWM merged with and into Neenah (the "Merger"), with Neenah surviving the Merger as a direct and wholly-owned subsidiary of SWM.
A wholly-owned subsidiary of SWM merged with and into Neenah (the "Merger"), with Neenah surviving the Merger as a direct and wholly-owned subsidiary of SWM. Effective as of the closing date of the Merger, SWM changed its name to Mativ Holdings, Inc..
We also produce a variety of branded paper-based products for the consumer channel, such as bright papers, cardstock, stationery paper, envelopes, journals, and planners. Engineered papers: We are a leading producer of natural fiber-based solutions and services, primarily serving the combustibles tobacco market, as well as other niche applications.
We also produce a variety of branded paper-based products for the consumer channel, such as bright papers, cardstock, stationery paper, envelopes, journals, and planners. Markets and Customers. Our FBS segment is generally more mature given its exposures to commercial print which has historically demonstrated secular volume declines.
The three AquaHome systems in the Philippines are providing families with solar powered electricity and drinking water at home. • FSC ® Certification : All unprocessed wood fiber and pulp and wood-based bioenergy consumed are sourced exclusively from suppliers maintaining FSC and/or PEFC Chain of Custody certification and/or have achieved FSC and/or PEFC Mix Credit or Controlled Wood certification.
Since our partnership with Planet Water Foundation began, Mativ has enabled access to fresh drinking water for up to 33,000 people. • FSC ® Certification : All unprocessed pulp is sourced exclusively from suppliers maintaining FSC and/or PEFC Chain of Custody certification and/or has achieved FSC Mix, FSC Recycled, or FSC Controlled Wood certification.
In addition, Mativ developed a biodegradable cigarette filter media that is designed to replace cellulose acetate which contributes to microplastics pollution (or similar debris) in the ocean. • Filtration Products that Benefit Society : Mativ produces a diverse portfolio of products that make water and air cleaner and safer.
Some of our key environmental and community initiatives are highlighted below: Environmental Initiatives • Filtration Products that Benefit Society : Mativ produces a diverse portfolio of products that make water and air cleaner and safer.
Removed
Effective as of the closing date of the Merger, SWM changed its name to Mativ Holdings, Inc. ("Mativ," "we," "our," or the "Company"). Mativ is a global leader in specialty materials headquartered in Alpharetta, Georgia, United States of America.
Added
Unless the context indicates otherwise, references to “Mativ,” the “Company,” “we,” “us,” “our,” or similar terms include Mativ Holdings, Inc. and our consolidated subsidiaries.
Removed
The Company offers a wide range of critical components and engineered solutions to solve customers' most complex challenges, targeting premium applications across diversified and growing end-markets.
Added
GENERAL Background Mativ Holdings, Inc. is a global leader in manufacturing specialty materials, making impacts on the world every day through a wide range of critical components and engineered solutions that solve our customers’ most complex challenges. Mativ manufactures globally through our family of business-to-business and consumer product brands.
Removed
Our stock is traded on the New York Stock Exchange ("NYSE") under the symbol "MATV." Strategic Narrative The Company believes the Merger created a global leader in specialty materials with nearly $3.0 billion in sales, attractive margins, and approximately $65 million of anticipated synergies within 3 years, with value creation and growth opportunities exceeding what each legacy company could have achieved independently.
Added
Over time, the Company diversified its portfolio through innovation efforts and a number of acquisitions to broaden its exposure to adjacent categories, such as filtration, specialty films, tapes, and healthcare. On July 6, 2022, Schweitzer-Mauduit International, Inc. ("SWM") completed the merger transaction involving Neenah, Inc. ("Neenah").
Removed
We consider the Merger a transformational step in the competitive position of the combined entity.
Added
On August 1, 2023, the Company entered into a final, binding and irrevocable offer letter (the “Offer Letter”) with Evergreen Hill Enterprise Pte.
Removed
In addition to the expanded manufacturing and technology capabilities, our increased presence in growing end-markets and the powerful combination of our design and innovation programs are expected to offer significant commercial and operational benefits and the potential to accelerate long-term growth. 1 What started in 1995 for legacy SWM and 2004 for legacy Neenah as two lower growth companies with limited end-market exposure and manufacturing technologies, has culminated in the merger of separate but similar transformative journeys.
Added
Ltd., an affiliate of PT Bukit Muria Jaya (“Evergreen Hill Enterprise”) pursuant to which Evergreen Hill Enterprise made a binding offer (the “Offer”) to acquire the Company’s Engineered Papers business ("EP business") for $620.0 million in cash, subject to customary closing date adjustments (the “EP Divestiture”).
Removed
Both companies evolved their respective portfolios toward large, growing, defensible categories that value a range of premium, unique engineered solutions.
Added
Pursuant to the terms of the Offer Letter, following the conclusion of the required employee consultation process with its French works councils (the "French Consultation Process"), the Company accepted Evergreen Hill Enterprise's Offer and countersigned the Purchase Agreement, dated as of August 1, 2023 (the "Purchase Agreement"), with respect to the EP Divestiture on October 4, 2023.
Removed
Over time, each company repositioned to a more diversified and growth-oriented enterprise while maintaining a company-wide focus on several underlying themes: focus on high-value categories, deep material science know-how, solution-driven product design and innovation, and customizable manufacturing capabilities to solve customers' complex challenges.
Added
On November 30, 2023, the Company completed the sale of its EP business. With the sale of the EP business, Mativ ceased participating in tobacco-based products markets. 1 Effective with the Offer, the EP business is presented as a discontinued operation for all periods presented.
Removed
The companies selectively targeted acquisition candidates that served diversified and growing end-markets, generated profitability associated with premium differentiated products, and had leading and defensible competitive positions in their core product categories. Over the last several years, each company successfully completed acquisitions which increasingly aligned the two business profiles, with about two-thirds of the overall businesses weighted towards higher growth categories.
Added
Current and non-current assets and liabilities of the EP business are classified as held for sale, and certain prior period amounts have been retrospectively revised to reflect these changes. The consolidated financial statements and the notes thereto, unless otherwise indicated, are on a continuing operations basis. Refer to Note 9.
Removed
The Company can address our customers’ and markets’ most complex and challenging needs by offering an expanded variety of manufacturing capabilities and technical solutions, ranging from advanced coating, engineered nonwovens, and polymer extrusion, to specialty adhesives—all core technologies that align with our target categories' evolving needs and increasing technical demands.
Added
Discontinued Operations of the Notes to Consolidated Financial Statements for more information on the discontinued operation and transaction.

… 73 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

66 edited+21 added−54 removed104 unchanged
Biggest changeForeign Corrupt Practices Act ("FCPA") and other anti-corruption laws or trade control laws, as well as other laws governing our operations; • The effect of foreign currency exchange rates; • We could be subject to changes in our tax rates, the adoption of new U.S., or foreign tax legislation or exposure to additional tax liabilities; • Competition from several established competitors and limited market transparency; • Our FBS segment is dependent upon a small number of customers for a significant portion of its sales; • Continued governmental actions relating to tobacco products, as well as decreased demand for traditional products or the impacts of new related technologies such as e-cigarettes and vaping, may adversely impact our business; • The availability of credit and changes in interest rates; • The replacement of LIBOR with SOFR; • Our failure to comply with the covenants contained in our credit agreements and other debt instruments could result in an event of default that could cause acceleration of our indebtedness; • Future dividends on our common stock may be restricted or eliminated; • Risks related to our internal and external expansion plans and asset dispositions; • The substantial costs related to the integration of Neenah; • Our failure to realize some or all of the anticipated benefits of the Merger; • A loss of customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners as a result of the Merger; • Our future results may suffer if we do not effectively manage our expanded operations; • We may not successfully integrate acquisitions into Mativ's operations; • Our restructuring activities are time-consuming and expensive; • The cost and availability of raw materials and energy; • A failure of, or a security breach in, a key information technology system could compromise our information and expose us to liability; • We rely on a limited number of key employees; • We face various risks related to the COVID-19 pandemic and similar health-related outbreaks; • Our business is subject to various environmental laws, regulations and related litigation that could impose substantial costs or other liabilities on us; • Environmental, social and governance ("ESG") issues may have an adverse effect on our business, financial condition and results of operations, the desirability of our stock, and may damage our reputation; • Increases in costs of pension benefits may reduce our profitability; 13 • We are subject to various legal actions and other claims; • Any loss or interruption of the operations of our facilities; • Fluctuations in construction and infrastructure spending; and • We have historically experienced significant cost savings and productivity benefits relating to our ongoing operational excellence program.
Biggest changeForeign Corrupt Practices Act ("FCPA") and other anti-corruption laws or trade control laws, as well as other laws governing our operations; • The effect of foreign currency exchange rates; • We could be subject to changes in our tax rates, the adoption of new U.S., or foreign tax legislation or exposure to additional tax liabilities; • Competition from several established competitors and limited market transparency; • The availability of credit and changes in interest rates; • Our failure to comply with the covenants contained in our credit agreements and other debt instruments could result in an event of default that could cause acceleration of our indebtedness; • Future dividends on our common stock may be restricted or eliminated; • Risks related to our internal and external expansion plans and asset dispositions; • The substantial costs related to the integration of Neenah; • Our failure to realize some or all of the anticipated benefits of the Merger; • Our failure to recognize the strategic benefits of the EP Divestiture; • A loss of customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners as a result of the Merger; • Our future results may suffer if we do not effectively manage our expanded operations; • We may not successfully integrate acquisitions into Mativ's operations; • Our restructuring activities are time-consuming and expensive; • The cost and availability of raw materials and energy; • A failure of, or a security breach in, a key information technology system could compromise our information and expose us to liability; • We rely on a limited number of key employees; • We face various risks related to public health emergencies and similar health-related outbreaks such as the COVID-19 pandemic; • Our business is subject to various environmental laws, regulations and related litigation that could impose substantial costs or other liabilities on us; • Environmental, social and governance ("ESG") issues may have an adverse effect on our business, financial condition and results of operations, the desirability of our stock, and may damage our reputation; • Increases in costs of pension benefits may reduce our profitability; • We are subject to various legal actions and other claims; • Any loss or interruption of the operations of our facilities; • Fluctuations in construction and infrastructure spending; and 13 • We have historically experienced significant cost savings and productivity benefits relating to our ongoing operational excellence program which we may not be able to achieve in the future.
In the event that we need to enforce certain of our patents against infringement through judicial or administrative actions, the litigation to protect these rights is often costly and time consuming and diverts management resources; moreover, there can be no assurance that our efforts to protect our 14 intellectual property will be successful, or that a defendant will not assert counterclaims against us or challenges to other intellectual property we may own.
In the event that we need to enforce certain of our patents against infringement through judicial or administrative actions, the litigation to protect these rights is often costly and time consuming and diverts management resources; moreover, there can be no assurance that our efforts to protect our intellectual property will be successful, or that a defendant will not assert counterclaims against us or challenges to other intellectual property we may own.
If we are unable to meet our ESG goals or evolving investor, industry, or stakeholder expectations and standards, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, customers and consumers may choose to stop purchasing our products or purchase products from another company or a competitor, and our reputation, the desirability of our stock to investors, and our business or financial condition may be adversely affected.
If we are unable to meet our ESG goals or evolving investor, industry, or stakeholder expectations and standards, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, customers and consumers may choose to 24 stop purchasing our products or purchase products from another company or a competitor, and our reputation, the desirability of our stock to investors, and our business or financial condition may be adversely affected.
We also hold a significant amount of our cash balances in euros and British pounds, thus any weakening of these currencies versus the U.S. dollar would reduce the amount of U.S. dollars for which such balances could be exchanged. 16 Changes in foreign currency exchange rates also impact the amount reported in Other income (expense), net.
We also hold a significant amount of our cash balances in euros and British pounds, thus any weakening of these currencies versus the U.S. dollar would reduce the amount of U.S. dollars for which such balances could be exchanged. Changes in foreign currency exchange rates also impact the amount reported in Other income (expense), net.
Moreover, natural disasters, political crises, public health crises (such as the ongoing COVID-19 pandemic and the measures put in place to reduce its spread) or other unforeseen catastrophic events in any of the countries in which we operate may negatively impact our facilities, our supply chain or customers.
Moreover, natural disasters, political crises, public health crises (such as the ongoing COVID-19 pandemic and the measures put in place to reduce its spread) or other unforeseen catastrophic events in any of the countries in which we operate may negatively impact our facilities, our supply 25 chain or customers.
Any interruption or curtailment of operations at any of our production facilities due to drought or low flow conditions at the principal water source or another cause could materially and adversely affect our operating results and financial condition. 27 Fluctuations in construction and infrastructure spending can impact demand for certain of our products.
Any interruption or curtailment of operations at any of our production facilities due to drought or low flow conditions at the principal water source or another cause could materially and adversely affect our operating results and financial condition. Fluctuations in construction and infrastructure spending can impact demand for certain of our products.
The cost of wood pulp, which is the largest component of the raw materials that we use in our FBS segment, and some resins used by our ATM segment are highly cyclical and can be more volatile than general consumer or producer inflationary changes in the general economy.
The cost of wood pulp, which is the largest component of the raw materials that we use in our FBS segment, and some resins used by our 21 ATM segment are highly cyclical and can be more volatile than general consumer or producer inflationary changes in the general economy.
In that event, we may be subject to significant claims for damages or disruptions to our operations. Because of the geographic diversity of our business, we are subject to a range of international risks. Our operations are located in many countries around the world and operate, to a degree, in a decentralized manner.
In that event, we may be subject to significant claims for damages or disruptions to our operations. 14 Because of the geographic diversity of our business, we are subject to a range of international risks. Our operations are located in many countries around the world and operate, to a degree, in a decentralized manner.
In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted. We are also subject to other laws and regulations governing our international operations, including regulations administered by the U.S.
In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted. 15 We are also subject to other laws and regulations governing our international operations, including regulations administered by the U.S.
Although Mativ expects that the elimination of duplicative costs and the realization of other economies 21 of scale-related efficiencies related to the integration of the businesses may offset incremental Merger-related and integration costs over time, any net benefit may not be achieved in the near term or at all.
Although Mativ expects that the elimination of duplicative costs and the realization of other economies of scale-related efficiencies related to the integration of the businesses may offset incremental Merger-related and integration costs over time, any net benefit may not be achieved in the near term or at all.
Additionally, we may not be able to achieve anticipated cost savings or commercial or growth synergies for a number of reasons, including contractual constraints and obligations or an 22 inability to take advantage of expected commercial opportunities, inability to achieve increased operating efficiencies or commercial expansion of key technologies.
Additionally, we may not be able to achieve anticipated cost savings or commercial or growth synergies for a number of reasons, including contractual constraints and obligations or an inability to take advantage of expected commercial opportunities, inability to achieve increased operating efficiencies or commercial expansion of key technologies.
It can be time consuming and costly, and occasionally impractical, to find replacement resins where such suppliers limit the availability or increase the cost of resins we use. 23 Our manufacturing operations, in particular paper manufacturing, is energy-intensive.
It can be time consuming and costly, and occasionally impractical, to find replacement resins where such suppliers limit the availability or increase the cost of resins we use. Our manufacturing operations, in particular paper manufacturing, is energy-intensive.
Mativ’s future success will depend, in part, upon its ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity.
Mativ’s future success will depend, in part, upon its ability to manage this expanded business, which will pose substantial challenges for 20 management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity.
Similarly, we are starting to see increased competition for some of our ATM products from companies in China, which, we believe, may have lower operating costs than us, resulting in a potential price advantage for such companies.
We are starting to see increased competition for some of our ATM products from companies in China, which, we believe, may have lower operating costs than us, resulting in a potential price advantage for such companies.
There can be no assurance that we will be able to acquire attractive businesses on favorable terms, that we will realize the anticipated benefits or profits through acquisitions or that acquisitions will be accretive to our earnings.
There can be no assurance that we will be able to acquire attractive businesses on favorable terms and that we will realize the anticipated benefits or profits through acquisitions or that acquisitions will be accretive to our earnings.
If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could adversely affect our business, financial condition and results of operations. We are subject to anti-corruption laws, including the FCPA, and other anti-corruption laws that apply in countries where we do business.
If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could adversely affect our business, financial condition and results of operations. We are subject to anti-corruption laws, including the FCPA, and other anti-corruption laws that apply in countries where we do business. The FCPA, the U.K.
Ultimately, our various patents will expire and some may be held invalid in certain jurisdictions before their expiration dates. In addition to protecting certain of our technological advantages through patenting, we also protect a significant amount of our technological advantages as trade secrets, especially with regard to our ATM segment and our RTL products.
Ultimately, our various patents will expire and some may be held invalid in certain jurisdictions before their expiration dates. In addition to protecting certain of our technological advantages through patenting, we also protect a significant amount of our technological advantages as trade secrets, especially with regard to our ATM segment.
While not an exhaustive list, the following important risk factors could affect our future results, including our actual results for 2022 and thereafter and could also cause our actual results to differ materially from those expressed in any forward-looking statements we have made or may make.
While not an exhaustive list, the following important risk factors could affect our future results, including our actual results for 2023 and thereafter and could also cause our actual results to differ materially from those expressed in any forward-looking statements we have made or may make.
Our assets or cash flows may not be sufficient to fully repay borrowings under our outstanding debt instruments, and we may be unable to refinance or restructure the payments on indebtedness on favorable terms, or at all. 20 Future dividends on our common stock may be restricted or eliminated.
Our assets or cash flows may not be sufficient to fully repay borrowings under our outstanding debt instruments, and we may be unable to refinance or restructure the payments on indebtedness on favorable terms, or at all. 18 Future dividends on our common stock may be restricted or eliminated.
Risk Factors Summary Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, those relating to: • Our technological advantages are unlikely to continue indefinitely; • Policing our intellectual property and patent rights is costly and may be unsuccessful; • International geopolitical and other risks associated with our sales and operations outside of the United States, due to political unrest, terrorist acts, and national and international conflict, including Russia's invasion of Ukraine; • Failure to comply with the U.S.
Risk Factors Summary Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, those relating to: • Our technological advantages are unlikely to continue indefinitely; • Policing our intellectual property and patent rights is costly and may be unsuccessful; • International geopolitical and other risks associated with our sales and operations outside of the United States, due to political unrest, terrorist acts, and national and international disputes, including Russia's invasion of Ukraine and the conflict between Israel and Hamas; • Failure to comply with the U.S.
In the U.K., the European Union, China and the U.S., availability of energy generally is reliable, although prices can fluctuate significantly based on demand. Western Europe is becoming significantly dependent on energy supplies from the Commonwealth of Independent States, which in the past has demonstrated a willingness to restrict or cut off supplies of energy to certain customers.
In the U.K., the European Union, China and the U.S., availability of energy generally is reliable, although prices can fluctuate significantly based on supply and demand. Western Europe has become significantly dependent on energy supplies from the Commonwealth of Independent States, which in the past has demonstrated a willingness to restrict or cut off supplies of energy to certain customers.
These changes, or other changes in other environmental laws or the interpretation thereof, new enforcement of laws, the identification of new facts or the failure of other parties to perform remediation at our current or former facilities could lead to new or greater liabilities that could materially adversely affect our business, results of operations, cash flows or financial condition.
These changes, or other changes in other environmental laws or the interpretation thereof, new enforcement of laws, the identification of new facts or the failure of other parties to perform remediation at our current or former facilities could be costly and lead to new or greater liabilities that could materially adversely affect our business, results of operations, cash flows or financial condition.
Production facilities for our FBS segment rely on a local water body or water source for their water needs and, therefore, are particularly sensitive to drought conditions or other natural or man-made interruptions to water supplies.
Production facilities for our segments rely on a local water body or water source for their water needs and, therefore, are particularly sensitive to drought conditions or other natural or man-made interruptions to water supplies.
Our foreign sales and operations may be adversely affected by supply chain disruptions due to political unrest, terrorist acts, and national and international conflict, including Russia's invasion of Ukraine. We conduct a portion of our sales and manufacturing outside the United States.
Our foreign sales and operations may be adversely affected by supply chain disruptions due to political unrest, terrorist acts, and national and international dispute, including Russia's invasion of Ukraine and the conflict between Israel and Hamas. We conduct a portion of our sales and manufacturing outside the United States.
Increases in costs of pension benefits may reduce our profitability. Our results of operations may be negatively affected by expenses we record for our defined benefit pension plans. Generally accepted accounting principles in the U.S., require that we calculate income or expense for the plans using actuarial valuations.
Increases in costs of pension benefits may reduce our profitability and could impact our cash reserves. Our results of operations may be negatively affected by expenses we record for our defined benefit pension plans. Generally accepted accounting principles in the U.S., require that we calculate income or expense for the plans using actuarial valuations.
We expect to continue to achieve significant savings and benefits from this program; however, we may be unable to continue in the future to obtain savings and benefits in line with historical achievements, and our profitability and financial results could be adversely affected.
We expect to continue to achieve significant savings and benefits from these efforts; however, we may be unable to continue in the future to obtain savings and benefits in line with historical achievements, and our profitability and financial results could be adversely affected.
Although we are not aware of any environmental conditions at any of our facilities that could have a material adverse effect on our financial condition, results of operations and cash flows, we own facilities in France, the U.S. and elsewhere that have been operated over the course of many decades.
Although we are not aware of any environmental conditions at any of our facilities that could have a material adverse effect on our financial condition, results of operations and cash flows, we own facilities that have been operated over the course of many decades.
We have initiated significant restructuring activities in recent years, in Brazil, France, the Philippines and the U.S. that have become part of an overall effort to improve an imbalance between demand for our products and our production capacity as well as improve our profitability and the quality of our products.
We have initiated significant restructuring activities in recent years that have become part of an overall effort to improve an imbalance between demand for our products and our production capacity as well as improve our profitability and the quality of our products.
As a result, such disruptions will put upward pressure on our costs and increase the risk that we may be unable to acquire the materials and energy we need to continue to make certain products, in particular at our manufacturing facilities in Europe.
As a result, such disruptions will put upward pressure on our costs and increase the risk that we may be unable to acquire the materials and energy we need to continue to make certain products, in particular at our manufacturing facilities in Europe. Item 1B. Unresolved Staff Comments None.
There can be no assurance that our hedging activities will have the desired beneficial impact on our results of operations or financial condition. Termination of interest rate hedge agreements typically involves costs, such as transaction fees or breakage costs. The replacement of LIBOR with SOFR may adversely affect our results of operations.
There can be no assurance that our hedging activities will have the desired beneficial impact on our results of operations or financial condition. Termination of interest rate hedge agreements typically involves costs, such as transaction fees or breakage costs.
There are inherent control and fraud risks in such a structure. Moreover, we have manufacturing facilities in fourteen countries and two joint ventures in China and sell products in over 100 countries, many of which are emerging and undeveloped markets.
There are inherent control and fraud risks in such a structure. Moreover, we have manufacturing facilities in twelve countries and sell products in over 100 countries, many of which are emerging and undeveloped markets.
There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the Merger and the integration of the two companies’ businesses, including purchasing, accounting and finance, sales, payroll, pricing and benefits.
Mativ will likely continue to incur substantial integration costs in connection with the Merger. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the Merger and the integration of the two companies’ businesses, including purchasing, accounting and finance, sales, payroll, pricing and benefits.
Due to the Merger, some of the customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners of Mativ may terminate or scale back their current or prospective business relationships with Mativ.
The Merger may result in a loss of customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners and may result in the termination of existing contracts. Due to the Merger, some of the customers, distributors, suppliers, vendors, landlords, and other business partners of Mativ may terminate or scale back their current or prospective business relationships with Mativ.
Not only could these cost overruns and delays impact our financial statements but a delay in the completion of a needed IT project could adversely impact our ability to run our business and make fully informed decisions. 24 We rely on a limited number of key employees.
Not only could these cost overruns and delays impact our financial statements but a delay in the completion of a needed IT project could adversely impact our ability to run our business and make fully informed decisions.
We employ approximately 7,500 employees, including certain manufacturing employees represented by unions. Although we believe that employee and union relations are generally positive, there is no assurance that this will continue in the future and problems or changes affecting employees in certain locations may affect relations with our employees at other locations.
Although we believe that employee and union relations are generally positive, there is no assurance that this will continue in the future and problems or changes affecting employees in certain locations may affect relations with our employees at other locations.
National and international conflicts such as war, border closures, civil disturbances and terrorist acts, including Russia's invasion of Ukraine, may increase the likelihood of already strained supply interruptions and further hinder our ability to access the materials and energy we need to manufacture our products.
National and international disputes such as war, border closures, civil disturbances and terrorist acts, including Russia's invasion of Ukraine, the conflict between Israel and Hamas and related disturbances in the Middle East may increase the likelihood of already strained supply interruptions and further hinder our ability to access the materials and energy we need to manufacture our products.
Including the impact of these transactions, as of December 31, 2022, the percentage of the Company’s debt subject to fixed and floating rates of interest was 77.1% and 22.9%, respectively.
Including the impact of these transactions, as of December 31, 2023, the percentage of the Company’s debt subject to fixed and floating rates of interest was 77.0% and 23.0%, respectively.
As of December 31, 2022, the percentage of the Company’s fixed and floating interest rate debt was 20.8% and 79.2%, respectively. The Company has entered into a number of interest rate hedge transactions to convert floating rate debt to fixed.
As of December 31, 2023, the percentage of the Company’s fixed and floating interest rate debt was 31.0% and 69.0%, respectively. The Company has entered into a number of interest rate hedge transactions to convert floating rate debt to fixed.
In the event of material unforeseen events that impact our financial performance, particularly during a time when we have material amounts of debt, a situation could arise where we are unable to fully draw from our existing credit facility notwithstanding that there is otherwise available capacity. 19 Our credit facilities are secured by substantially all of the personal property of the Company and its domestic subsidiaries.
In the event of material unforeseen events that impact our financial performance, particularly during a time when we have material amounts of debt, a situation could arise where we are unable to fully draw from our existing credit facility notwithstanding that there is otherwise available capacity.
These factors together with risks inherent in international operations, including risks associated with any non-compliance with anti-corruption and anti-bribery laws, could adversely affect our financial condition, results of operations and cash flows. • We participate in two joint ventures and have one manufacturing facility in China. The joint ventures sell our products primarily to Chinese tobacco companies.
These factors together with risks inherent in international operations, including risks associated with any non-compliance with anti-corruption and anti-bribery laws, could adversely affect our financial condition, results of operations and cash flows. • We have one manufacturing facility in China.
During the year ended December 31, 2022, the Company became aware of a cyber attack that had been made against certain systems within the Company's network environment. Refer to Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional information.
During the year ended December 31, 2022, the Company became aware of a cyber attack that had been made against certain systems within the Company's network environment. Refer to Part II, Item 7.
Additionally, in recent years, assessments of the potential impacts of climate change have begun to influence governmental authorities, consumer behavior patterns and the general business environment of the European Union and the United States.
Violation of these laws can result in the imposition of significant fines and remediation costs. Additionally, in recent years, assessments of the potential impacts of climate change have begun to influence governmental authorities, consumer behavior patterns and the general business environment of the European Union and the United States.
Some of these competitors are larger than we are and have more resources, thus the actions of these competitors could have an impact on the results of our ATM segment operations.
We believe our ATM products compete primarily on product features, innovations and customer service. Some of these competitors are larger than we are and have more resources, thus the actions of these competitors could have an impact on the results of our ATM segment operations.
Historically, we have experienced significant cost savings and productivity benefits relating to our ongoing operational excellence program in our FBS segment.
Historically, we have experienced significant cost savings and productivity benefits relating to our ongoing continuous improvement and operational excellence programs.
The FCPA, the 2013 Brazilian Clean Companies Act, the U.K. Bribery Act of 2010, the 2013 Russian Law on Preventing Corruption and these other laws generally prohibit us, our employees, consultants and agents from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage.
Bribery Act of 2010 and other similar laws generally prohibit us, our employees, consultants and agents from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage.
If our future revenues, costs and results of operations are significantly affected by economic conditions abroad and/or we are unable to effectively hedge these risks, they could materially adversely affect our financial condition, results of operations and cash flows.
If our future revenues, costs and results of operations are significantly affected by economic conditions abroad and/or we are unable to effectively hedge these risks, they could materially adversely affect our financial condition, results of operations and cash flows. 16 The Company could be subject to changes in its tax rates, the adoption of new U.S., or foreign tax legislation or exposure to additional tax liabilities.
Commitments and Contingencies, of the Notes to Consolidated Financial Statements and in Part I, Item 3, “Legal Proceedings” of this report. We also cannot give any assurances as to any litigation that might be filed against us in the future, including any claims relating to the alleged harmful effect of tobacco use on human health.
Commitments and Contingencies, of the Notes to Consolidated Financial Statements and in Part I, Item 3, “Legal Proceedings” of this report. We also cannot give any assurances as to any litigation that might be filed against us in the future. Any loss or interruption of the operations of our facilities may harm our operating performance.
The loss of any of our key employees, including our CEO and her direct reports, could adversely affect our business and thus our financial condition, results of operations and cash flows.
We rely on a limited number of key employees and our failure to recruit and/or retain senior management and key employees globally could harm our business. The loss of any of our key employees, including our CEO and her direct reports, could adversely affect our business and thus our financial condition, results of operations and cash flows.
The Company’s future effective tax rate could be affected by changes in the mix of earnings in countries with differing statutory tax rates or future changes in tax laws or new interpretations of existing tax laws.
The Company is subject to taxes in the U.S. and in foreign jurisdictions where a number of the Company’s subsidiaries are organized. The Company’s future effective tax rate could be affected by changes in the mix of earnings in countries with differing statutory tax rates or future changes in tax laws or new interpretations of existing tax laws.
Operations in China entail a number of risks including international and domestic political risks, the need to obtain operating and other permits from the government, adverse changes in the policies or in our relations with government-owned or run customers and the uncertainty inherent in operating within an evolving legal and economic system.
Operations in China entail a number of risks including international and domestic political risks, the need to obtain operating and other permits from the government, adverse changes in the policies or in our relations with government-owned or run customers and the uncertainty inherent in operating within an evolving legal and economic system. • Changes or increases in international trade sanctions or quotas may restrict or prohibit us from transacting business with established customers or securing new ones, including as to Russia and Ukraine, as to which the applicable sanctions have changed unexpectedly on a number of occasions since 2014.
We consider our intellectual property and patents to be a material asset. We have been at the forefront of developing new products and technology within our industries and have patented several of our innovations, particularly with regard to cigarette paper used to produce LIP cigarettes.
Our technological advantages are unlikely to continue indefinitely. We consider our intellectual property and patents to be a material asset. We have been at the forefront of developing new products and technology within our industries and have patented many of our innovations.
At the end of 2022, the combined projected benefit obligation of our pension plans had a net underfunding of $26.8 million. For a discussion regarding 26 our pension obligations, refer to Note 18.
At the end of 2023, the combined projected benefit obligation of our pension plans had a net underfunding of $11.8 million.
The occurrence of the above risks could have a material adverse effect on our financial condition, results of operations and cash flows. Our business depends upon good relations with our employees. Work stoppages, slowdowns or legal action by our unionized employees may have a material adverse effect on our business, financial condition, results of operations and cash flows.
Work stoppages, slowdowns or legal action by our unionized employees may have a material adverse effect on our business, financial condition, results of operations and cash flows. We employ approximately 5,400 employees, including certain manufacturing employees represented by unions.
We selectively hedge our exposure to interest rate increases on our variable rate long-term debt when we believe that it is practical to do so. We have utilized various forms of interest rate hedge agreements, including interest rate swap agreements, forward rate agreements and cross currency swaps.
We may utilize a combination of variable and fixed-rate debt consisting of short-term and long-term instruments. We selectively hedge our exposure to interest rate increases on our variable rate long-term debt when we believe that it is practical to do so.
Even where we do not have fixed-price agreements, we generally cannot pass through increases in raw material costs in a timely manner and in many instances are not able to pass through the entire increase to our customers.
Even where we do not have fixed-price agreements, we may be limited in our ability to pass through increases in raw material costs in a timely manner or may be unable to pass through increases to our customers in whole or in part.
Ltd., 3M Company, Covestro AG, ORAFOL Europe GmbH, Hollingsworth and Vose Company, Advanced Medical Solutions Group plc, Avery Dennison, Ahlstrom-Munksjo, Mondi plc, Loparex LLC, Monadnock Paper Mills, Inc., and Potsdam Specialty Paper, Inc. We believe our ATM products compete primarily on product features, innovations and customer service.
Our ATM segment products compete to some degree against specialty products made by competitors such as Shaoxing Naite Plastics Co. Ltd., 3M Company, Covestro AG, ORAFOL Europe GmbH, Hollingsworth and Vose Company, Advanced Medical Solutions Group plc, Avery Dennison, Ahlstrom Holding 3 Oy, Mondi plc, Loparex LLC, Monadnock Paper Mills, Inc., and Potsdam Specialty Paper, Inc.
Periodically, when we believe it is advantageous to do so, we enter into agreements to procure a portion of our energy for future periods in order to reduce the uncertainty of future energy costs. However, in recent years this has only marginally slowed the increase in energy costs due to the volatile changes in energy prices we have experienced.
Due to the competitive pricing of most of our products, we typically are unable to fully pass through higher energy costs to our customers. Periodically, when we believe it is advantageous to do so, we enter into agreements to procure a portion of our energy for future periods in order to reduce the uncertainty of future energy costs.
Any loss or interruption of the operations of our facilities may harm our operating performance. Our revenues depend on the effective operation of our manufacturing facilities.
Our revenues depend on the effective operation of our manufacturing facilities.
In the event of a default on these agreements, substantially all of the assets of the Company could be subject to foreclosure or liquidation by the secured creditors. We may utilize a combination of variable and fixed-rate debt consisting of short-term and long-term instruments.
Our credit facilities are secured by substantially all of the personal property of the Company and its domestic subsidiaries. In the event of a default on these agreements, substantially all of the assets of the Company could be subject to foreclosure or liquidation by the secured creditors.
However, we cannot guarantee that one or more of our patents will not be challenged by third parties and/or ultimately held invalid by courts or patent agencies of competent jurisdiction, which could remove the legal barriers preventing competitors from practicing our LIP technology among others.
We rely on patent, trademark, and other intellectual property laws of the U.S. and other countries to protect our intellectual property rights. However, we cannot guarantee that one or more of our patents will not be challenged by third parties and/or ultimately held invalid by courts or patent agencies of competent jurisdiction.
The implementation of these policies may require us to invest additional capital in our properties or it may restrict the availability of land we are able to develop.
The implementation of these policies may require us to invest additional capital in our properties or it may restrict the availability of land we are able to develop. For example, the State of California has adopted new climate change disclosure requirements which mandate public disclosure of certain greenhouse gas emissions data and climate-related financial risk reports.
There are also risks inherent with 50% joint ventures, such as a lack of ability to control, and visibility with respect to operations, customer relations and compliance practice, among others. • Changes or increases in international trade sanctions or quotas may restrict or prohibit us from transacting business with established customers or securing new ones, including as to Russia and the Ukraine, which are areas where the Company has offices and/or significant customers and as to which the applicable sanctions have changed unexpectedly on a number of occasions since 2014. 15 Changes in the laws and regulations described above, adverse interpretations or applications of such laws and regulations, and the outcome of various court and regulatory proceedings, including in Europe and Brazil, could adversely impact the Company's business in a variety of ways, including increasing expenses, increasing liabilities, decreasing sales, limiting its ability to repatriate funds and generally conduct business, all of which could adversely affect our financial condition, results of operations and cash flows.
Changes in the laws and regulations described above, adverse interpretations or applications of such laws and regulations, and the outcome of various court and regulatory proceedings, including in Europe and Brazil, could adversely impact the Company's business in a variety of ways, including increasing expenses, increasing liabilities, decreasing sales, limiting its ability to repatriate funds and generally conduct business, all of which could adversely affect our financial condition, results of operations and cash flows.
We are dependent upon the availability of credit, and changes in interest rates can impact our business. We supplement operating cash flow with bank borrowings under a secured credit agreement with a syndicate of banks. Borrowings under this agreement will mature in 2027 and 2028.
We supplement operating cash flow with bank borrowings under a secured credit agreement with a syndicate of banks. Borrowings under this agreement will mature in 2027 and 2028. To date, we have been able to access credit when needed and on commercially reasonable terms.
The potential future expansion of our ATM business unit or other operations could cause these operations to face additional competition from larger and more established competitors than is currently the case. Our ability to dispose of idled assets and the value that may be obtained relative to their book value can result in significant impairment charges.
Our ability to dispose of idled assets and the value that may be obtained relative to their book value can result in significant impairment charges.
We cannot guarantee that such efforts will succeed, that we will not incur new or different liabilities or that we will achieve a satisfactory return on such expenditures. Mativ will likely continue to incur substantial costs related to the integration of Neenah. Mativ will likely continue to incur substantial integration costs in connection with the Merger.
We cannot guarantee that such efforts will succeed, that we will not incur new or different liabilities or that we will achieve a satisfactory return on such expenditures. Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we have sold or will sell could adversely affect our financial statements.
An adverse result in one or more of these tax disputes could have a material adverse impact on our financial condition, results of operations and cash flows. We are also subject to other litigation in Brazil, including labor and workplace safety claims.
We may also dispose of a business at a price or on terms that are different than current balance sheet values, which could result in significant asset impairment charges, including those related to goodwill and other intangible assets that could have a material adverse effect on our financial condition and results of operations.
Removed
New smoking technologies such as e-cigarette and vaping technologies provide an alternative to and may decrease demand for traditional cigarettes and cigars, which could result in a decrease in demand for our products and adversely affect our consolidated results of operations, financial position and cash flows.
Added
If the Company’s effective tax rates were to increase, or if any ultimate determination of the Company’s taxes owed is for an amount in excess of amounts previously accrued, the Company’s operating results, cash flows, and financial condition could be adversely affected.
Removed
New smoking technologies, including e-liquids, vapable oils and other vaping products, provide an alternative to traditional cigarettes and cigars, which could result in a decrease in demand for our products, including cigarette papers, reconstituted tobacco leaf ("RTL") and associated items.
Added
In particular, the Organization for Economic Cooperation and Development (“OECD”) has reached agreement on an approach to establish a minimum global tax, set at 15%, for large multi-national enterprises, such as the Company.
Removed
As of December 31, 2022, approximately 60% of FBS segment sales are to customers in the tobacco end-market, with the majority of tobacco sales comprised of cigarette papers. Future sales and any future profits from cigarette papers and reconstituted tobacco products are substantially dependent upon the continued use of traditional cigarettes and cigars.
Added
The OECD has recommended that certain aspects of this approach, referred to as “Pillar Two”, be made effective beginning in 2024, and many jurisdictions, including most European Member States, have already legislated Pillar Two into their statutory law and others are in the process of doing so.
Removed
Growth in the use of, and interest in, e-liquids, vapable oils and other vaping products is likely to continue.
Added
The Company expects that Pillar Two will introduce new challenges with respect to compliance with Pillar Two reporting requirements. Therefore, the Company continues to monitor for updates as countries within its global footprint announce Pillar Two legislation and related guidance.
Removed
While traditional tobacco products are well established and revenue from traditional cigarette sales represents a substantial majority of total industry revenue, new smoking technologies may become more widely adopted and the business, growth prospects and financial condition of our FBS segment may be adversely affected. Our technological advantages are unlikely to continue indefinitely.
Added
As a result of these competitive advantages, our competitors and potential competitors may be able to respond more quickly to market forces, take advantage of acquisitions or other opportunities more readily, undertake more extensive marketing campaigns for their brands, products and services, more successfully utilize developing technology, including data analytics, artificial intelligence, and machine learning, and make more attractive offers to our existing and potential customers. 17 We are dependent upon the availability of credit, and changes in interest rates can impact our business.
Removed
We rely on patent, trademark, and other intellectual property laws of the U.S. and other countries to protect our intellectual property rights.
Added
We have utilized various forms of interest rate hedge agreements, including interest rate swap agreements, forward rate agreements and cross currency swaps.
Removed
The Company could be subject to changes in its tax rates, the adoption of new U.S., or foreign tax legislation or exposure to additional tax liabilities. The Company is subject to taxes in the U.S. and in foreign jurisdictions where a number of the Company’s subsidiaries are organized.
Added
We continually assess the strategic fit of our existing businesses and may divest, spin-off, split-off or otherwise dispose of businesses that are deemed not to fit with our strategic plan or are not achieving the desired return on investment. For example, on November 30, 2023, the Company completed the EP Divestiture.

… 61 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−1 removed0 unchanged
Biggest change(2) Does not include two sites owned by the two Chinese joint-ventures in which we have a non-controlling investment. (3) Includes leased sites as follows: United States - 7, Europe - 3, Asia/Pacific - 3, Americas - 1. We consider all of our facilities to be well-maintained, suitable for conducting our operations and business, and adequately insured.
Biggest change(2) Includes leased sites as follows: United States - 6, Europe - 2, Asia/Pacific - 3, Americas - 1. We consider all of our operating facilities to be well-maintained, suitable for conducting our operations and business, and adequately insured.
Our principal production facilities as of December 31, 2022 are summarized below: Geographic Region ATM FBS U.S. 17 8 Europe 1 11 5 Asia/Pacific (including China) 2 3 0 Americas (excluding U.S.) 2 1 Total 3 33 14 (1) The manufacturing site in Strykow, Poland and Quakertown, Pennsylvania serve both the ATM and FBS segments.
Our principal production facilities as of December 31, 2023 are summarized below: Geographic Region ATM FBS U.S. (1) 17 7 Europe 11 1 Asia/Pacific 3 0 Americas (excluding U.S.) 1 0 Total (2) 32 8 (1) The manufacturing site in Quakertown, Pennsylvania serves both the ATM and FBS segments.
Removed
Item 2. Properties As of December 31, 2022, we operated a total of 47 production facilities on four continents.
Added
Item 2. Properties As of December 31, 2023, we conduct business in over 100 countries and operate 40 production locations worldwide, with offices and facilities in the United States, United Kingdom, China, Germany, France, Belgium, Poland, India, Canada, Spain, Italy, Mexico, Netherlands and Luxembourg.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

5 edited+4 added−12 removed4 unchanged
Biggest changeHowever, future events, such as changes in existing laws and regulations, or unknown contamination or costs of remediation of sites owned, operated or used for waste disposal by the Company (including contamination caused by prior owners and operators of such sites or other waste generators) may give rise to additional costs which could have a material effect on its financial condition or results of operations. 30 Indemnification Matters In connection with our spin-off from Kimberly-Clark in 1995, we undertook to indemnify and hold Kimberly-Clark harmless from claims and liabilities related to the businesses transferred to us that were not identified as excluded liabilities in the related agreements.
Biggest changeHowever, future events, such as changes in existing laws and regulations, or unknown contamination or costs of remediation of sites owned, operated or used for waste disposal by the Company (including contamination caused by prior owners and operators of such sites or other waste generators) may give rise to additional costs which could have a material effect on its financial condition or results of operations.
The nature of the Company's operations exposes it to the risk of claims with respect to various environmental matters, and there can be no assurance that material costs or liabilities will not be incurred in connection with such claims.
The nature of the Company's operations exposes it to the risk of claims with 29 respect to various environmental matters, and there can be no assurance that material costs or liabilities will not be incurred in connection with such claims.
The German Supreme Court held that the claims of German counterpart of EP1482815 relevant to the Glatz infringement action were invalid. The ruling has the effect of nullifying the infringement decision and injunction against Glatz and the Company's claim for damages against Glatz. Glatz's counterclaim against the Company is still pending and is scheduled for hearing in March 2023.
The German Supreme Court held that the claims of German counterpart of EP1482815 relevant to the Glatz infringement action were invalid. This ruling has the effect of nullifying the infringement decision and injunction against Glatz and the Company’s claim for damages against Glatz. Glatz’s counterclaim against the Company was settled in June 2023.
Glatz filed an action in the German Patent Court to invalidate the German part of EP1482815. The German Patent Court held that some of the patent claims at issue were invalid and also that another claim at issue was valid. The Company has appealed the portion of the decision with respect to the claims held to be invalid.
The German Patent Court held that some of the patent claims at issue were invalid and also that another claim at issue was valid. The Company appealed the portion of the decision with respect to the claims held to be invalid.
In December 2017, the Dusseldorf Appeal Court affirmed the German District Court judgment on infringement of EP1482815 against Glatz. The Company filed an action against Glatz in the German District Court to set the amount of damages for the infringement and Glatz has filed a counterclaim.
The Company filed an action against Glatz in the German District Court to set the amount of damages for the infringement and Glatz filed a counterclaim. Glatz filed an action in the German Patent Court to invalidate the German part of EP1482815.
Removed
Litigation Brazil SWM-Brazil "SWM-B" received assessments from the tax authorities of the State of Rio de Janeiro (the "State") for unpaid Imposto sobre Circulação de Mercadorias e Serviços ("ICMS") and Fundo Estadual de Combate à Pobreza ("FECP") value-added taxes on interstate purchases of electricity.
Added
Litigation Germany In January 2015, the Company initiated patent infringement proceedings in Germany against Glatz under multiple low ignition propensity ("LIP") related patents. In December 2017, the Dusseldorf Appeal Court affirmed the German District Court judgment on infringement of EP1482815 against Glatz.
Removed
The State issued four sets of assessments against SWM-B for periods from May 2006 through December 2017 (collectively, the "Electricity Assessments"). The first through fourth assessments were received in February 2008, June 2011, October 2013, and August 2018, respectively.
Added
The Company recognized a $4.9 million loss during the three months ended June 30, 2023, which was included in Other income (expense), net in the Consolidated Statements of Income (Loss). The settlement was paid in the three months ended September 30, 2023.
Removed
SWM-B challenged all Electricity Assessments in administrative proceedings before the State tax council (in the Junta de Revisão Fiscal “first-level administrative court” and the Conselho de Contribuintes “administrative appellate court”) based on Resolution 1.610/89, which defers these taxes on electricity purchased by an "electricity-intensive consumer." In 2014, a majority of the administrative appellate court sitting en banc ruled against SWM-B in each of the first and second Electricity Assessments ($11.0 million based on the foreign currency exchange rate at December 31, 2022), and SWM-B is now pursuing challenges to these assessments in the State judicial system where SWM-B obtained preliminary injunctions against enforcement of both assessments.
Added
Indemnification Matters In connection with our spin-off from Kimberly-Clark in 1995, we undertook to indemnify and hold Kimberly-Clark harmless from claims and liabilities related to the businesses transferred to us that were not identified as excluded liabilities in the related agreements. As of December 31, 2023, there were no material claims pending under this indemnification.
Removed
In March 2020, the first-level judicial court ruled in favor of SWM-B in the second Electricity Assessment, a decision that is now on appeal. The third Electricity Assessment was dismissed on technical grounds in 2018. In August 2018, the State filed revised fourth Electricity Assessments for a combined amount of $9.0 million.
Added
In connection with the EP Divestiture, we undertook to indemnify and hold Evergreen Hill Enterprise harmless from claims and liabilities related to the EP business that were identified as excluded or specified liabilities in the related agreements up to an amount not to exceed $10 million. As of December 31, 2023, there were no material claims pending under this indemnification.
Removed
SWM-B filed challenges to these 29 2018 assessments in the first-level administrative court on the same grounds as the older cases, receiving unfavorable rulings from the courts in 2019. Both 2019 decisions are being appealed. The State issued a new regulation effective January 1, 2018 that only specific industries are “electricity-intensive consumers,” a list that excludes paper manufacturers.
Removed
SWM-B contends this regulation shows that paper manufacturers were electricity-intensive consumers eligible to defer ICMS before 2018. SWM-B cannot determine the outcome of the Electricity Assessments matters; as such so no loss has been accrued in our consolidated financial statements.
Removed
In December of 2000, SWM-B received two assessments from the tax authorities of the State for unpaid ICMS taxes on certain raw materials from January 1995 through October 1998 and from November 1998 through November 2000 (collectively, the "Raw Materials Assessments").
Removed
The Raw Materials Assessments concerned the accrual and use by SWM-B of ICMS tax credits generated from the production and sale of certain non-combustible related grades of paper sold domestically. An adverse judgement was received during 2019 and a provision of $8.6 million (based on the foreign currency exchange rate at March 31, 2021) was recorded in Other Liabilities.
Removed
On April 9, 2021, SWM-B resolved the Raw Materials Assessment by paying $2.6 million (based on the foreign currency exchange rate at March 31, 2021) under a tax amnesty program which reduced the tax liability by approximately 70%. All litigation is now concluded on this matter which is fully resolved.
Removed
As the result of the favorable settlement, we recognized a total benefit of $6.1 million in the first quarter of 2021, of which $4.6 million was in Interest expense and $1.6 million was in Other expense, net. Germany In January 2015, the Company initiated patent infringement proceedings in Germany against Glatz under multiple LIP-related patents.
Removed
The cost, timing and outcome of intellectual property litigation can be unpredictable and thus no assurances can be given as to the outcome or impact on us of such litigation. The Company cannot determine the outcome of the patent infringement matters; as such, no loss has been accrued in our consolidated financial statements.
Removed
As of December 31, 2022, there were no material claims pending under this indemnification.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+2 added−1 removed3 unchanged
Biggest changeThe following table indicates the cost of and number of shares of our Common Stock we have repurchased during 2022 and the remaining amount of share repurchases currently authorized by our Board of Directors as of December 31, 2022: Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Programs (# shares) (in millions) (in millions) January 1-March 31, 2022 94,847 $ 30.96 — $ — $ — April 1-June 30, 2022 1,387 27.50 — — — July 1-September 30, 2022 158,428 21.65 — — — October 1-October 31, 2022 13,244 23.90 — — — November 1-November 30, 2022 3,926 23.49 — — — December 1-December 31, 2022 1,195 20.35 — — — Total 2022 273,027 $ 25.04 — $ — $ — Transactions represent the purchase of vested restricted shares from employees to satisfy minimum tax withholding requirements upon vesting of stock-based awards.
Biggest changeThe following table indicates the cost of and number of shares of our Common Stock we have repurchased during 2023 and the remaining amount of share repurchases currently authorized by our Board of Directors as of December 31, 2023: Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Programs (# shares) (in millions) January 1 - March 31, 2023 54,435 $ 24.37 — $ — $ — April 1 - June 30, 2023 64,344 20.37 — — — July 1-September 30, 2023 281,920 15.83 280,939 4.4 — October 1-October 31, 2023 258,447 13.70 258,447 3.6 25.6 November 1-November 30, 2023 — — — — 22.0 December 1-December 31, 2023 — — — — 22.0 Total 2023 659,146 $ 16.14 539,386 $ 8.0 $ 22.0 Transactions represent the purchase of vested restricted shares from employees to satisfy minimum tax withholding requirements upon vesting of stock-based awards and shares purchased as part of our repurchase program approved in July 2023 and announced on August 2, 2023.
Debt of the Notes to Consolidated Financial Statements, none of which under normal business conditions materially limit our ability to pay such dividends. We 32 will continue to assess our dividend policy in light of our overall strategy, cash generation, debt levels and ongoing requirements for cash to fund operations and to pursue possible strategic opportunities.
Debt of the Notes to Consolidated Financial Statements, none of which under normal business conditions materially limit our ability to pay such dividends. We 31 will continue to assess our dividend policy in light of our overall strategy, cash generation, debt levels and ongoing requirements for cash to fund operations and to pursue possible strategic opportunities.
The graph assumes that the value of the investments in the Common Stock and each index were $100 on December 31, 2017, and that all dividends were reinvested. The stock price performance shown on the graph below is not necessarily indicative of future price performance. Comparison of Cumulative Five-Year Return Holders.
The graph assumes that the value of the investments in the Common Stock and each index were $100 on December 31, 2018, and that all dividends were reinvested. The stock price performance shown on the graph below is not necessarily indicative of future price performance. Comparison of Cumulative Five-Year Return Holders.
The following graph compares the total cumulative stockholder return on our Common Stock during the period from December 31, 2017 through December 31, 2022 with the comparable cumulative total returns of the Russell 2000, S&P SmallCap 600 Capped Materials Index and self-constructed peer group, both of which we consider to be reflective of the performance of the industries in which we operate.
The following graph compares the total cumulative stockholder return on our Common Stock during the period from December 31, 2018 through December 31, 2023 with the comparable cumulative total returns of the Russell 2000, S&P SmallCap 600 Capped Materials Index and self-constructed peer group, both of which we consider to be reflective of the performance of the industries in which we operate.
Recent Sales of Unregistered Securities. We had no unregistered sales of equity securities during the fiscal year ended December 31, 2022. Repurchases of Equity Securities.
Recent Sales of Unregistered Securities. We had no unregistered sales of equity securities during the fiscal year ended December 31, 2023. Repurchases of Equity Securities.
As of February 22, 2023, there were 1,895 stockholders of record. Dividends. We have declared and paid cash dividends on our Common Stock every fiscal quarter since the second quarter of 1996. In 2022, 2021 and 2020, we declared and paid cash dividends totaling $1.68, $1.76, and $1.76 per share, respectively.
As of February 26, 2024, there were 1902 stockholders of record. Dividends. We have declared and paid cash dividends on our Common Stock every fiscal quarter since the second quarter of 1996. In 2023, 2022 and 2021, we declared and paid cash dividends totaling $1.00, $1.68, and $1.76 per share, respectively.
Our common stock, $0.10 par value per share ("Common Stock") is trading on the New York Stock Exchange (NYSE") under the symbol "MATV." Prior to the Merger, our Common Stock was listed on the NYSE, trading under the symbol "SWM" since November 30, 1995. On February 22, 2023, our stock closed at $25.70 per share. Performance Graph.
Our common stock, $0.10 par value per share ("Common Stock") is trading on the New York Stock Exchange (NYSE") under the symbol "MATV." Prior to the Merger, our Common Stock was listed on the NYSE, trading under the symbol "SWM" since November 30, 1995. On February 26, 2024, our stock closed at $16.30 per share. Performance Graph.
On February 22, 2023, we announced a cash dividend of $0.40 per share payable on March 24, 2023 to stockholders of record as of the close of business on March 7, 2023. Our credit agreement covenants require that we maintain certain financial ratios, as disclosed in Note 14.
On February 21, 2024, we announced a cash dividend of $0.10 per share payable on March 22, 2024 to stockholders of record as of the close of business on March 8, 2024. Our credit agreement covenants require that we maintain certain financial ratios, as disclosed in Note 14.
Any future common stock repurchases will be dependent upon various factors, including the stock price of our Common Stock, strategic opportunities, strategic outlook and cash availability. From time-to-time, certain of our officers and directors may sell shares pursuant to personal 10b5-1 plans. 33
From time to time, the Company uses corporate 10b5-1 plans to allow for share repurchases to be made at predetermined stock price levels, without restricting such repurchases to specific windows of time. Any future common stock repurchases will be dependent upon various factors, including the stock price of our Common Stock, strategic opportunities, strategic outlook and cash availability.
Removed
Refer to Note 19. Stockholder's Equity of the Notes to Consolidated Financial Statements. We sometimes use corporate 10b5-1 plans to allow for share repurchases to be made at predetermined stock price levels, without restricting such repurchases to specific windows of time.
Added
In August 2023, the Board of Directors authorized the repurchase of shares of Mativ Common Stock in an amount not to exceed $30.0 million. Under the current $30.0 million authorization for the share repurchases, the Company purchased 539, 386 shares for $8.0 million as of February 26, 2024.
Added
From time-to-time, certain of our officers and directors may sell shares pursuant to personal 10b5-1 plans. 32

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+1 added−0 removed0 unchanged
Biggest changeItem 6. Selected Financial Data Due to the significance of the merger with Neenah, Inc. and the resulting change in our reportable segments, management deemed the historical selected information is not informative; and, therefore, it is intentionally omitted. Refer to the supplemental combined legacy financial information in the Company's Current Report on Form 8-K filed on December 22, 2022. 34
Biggest changeItem 6. Selected Financial Data Due to the significance of the EP Divestiture, which is accounted for as discontinued operations, and the Merger and the resulting change in our reportable segments, management concluded the historical selected information is not informative; therefore, it is intentionally omitted.
Added
Refer to the unaudited pro forma condensed consolidated balance sheet as of September 30, 2023, and the unaudited pro forma condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2023, and Consolidated Statements of Income (Loss) for the years ended December 31, 2022, 2021, and 2020 in the Company's Current Report on Form 8-K/A filed with the SEC on December 6, 2023, and the supplemental combined legacy financial information in the Company's Current Report on Form 8-K filed with the SEC on December 22, 2022. 33

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

70 edited+36 added−63 removed55 unchanged
Biggest changeRisk Factors of this report, as well as the following factors: • Risks associated with the implementation of our strategic growth initiatives, including diversification, and the Company's understanding of, and entry into, new industries and technologies; • Risks associated with acquisitions, dispositions, strategic transactions and global asset realignment initiatives of Mativ; • Adverse changes in the filtration, release liners, protective solutions, construction and infrastructure and healthcare sectors impacting key ATM segment customers; • Changes in the source and intensity of competition in our commercial end-markets: filtration, protective solutions, release liners, healthcare, and industrials for ATM, and packaging and specialty papers and engineered papers (tobacco and alternatives) for FBS; 51 • Adverse changes in sales or production volumes, pricing and/or manufacturing costs in our ATM or FBS operating segments; • Seasonal or cyclical market and industry fluctuations which may result in reduced net sales and operating profits during certain periods; • Risks associated with our technological advantages in our intellectual property and the likelihood that our current technological advantages are unable to continue indefinitely; • Supply chain disruptions, including the failure of one or more material suppliers, including energy, resin, fiber, and chemical suppliers, to supply materials as needed to maintain our product plans and cost structure; • Increases in operating costs due to inflation and continuing increases in the inflation rate or otherwise, such as labor expense, compensation and benefits costs; • Business disruptions from the Merger that will harm the Company's business, including current plans and operations; • The possibility that Mativ may be unable to successfully integrate Neenah's operations with those of Mativ and achieve expected synergies and operating efficiencies within the expected time-frames or at all; • Potential adverse reactions or changes to business relationships resulting from the Merger, including as it relates to the Company's ability to successfully renew existing client contracts on favorable terms or at all and obtain new clients; • Our ability to attract and retain key personnel, including as a result of the Merger, labor shortages, labor strikes, stoppages or other disruptions; • The substantial indebtedness Mativ has incurred and assumed in connection with the Merger and the need to generate sufficient cash flows to service and repay such debt; • Changes in general economic, financial and credit conditions in the U.S., Europe, China and elsewhere, including the impact thereof on currency exchange rates (including any weakening of the Euro and Real) and on interest rates; • The phasing out of USD LIBOR rates after 2023 and the replacement with SOFR; • A failure in our risk management and/or currency or interest rate swaps and hedging programs, including the failures of any insurance company or counterparty; • Changes in the manner in which we finance our debt and future capital needs, including potential acquisitions; • Changes in tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities; • Uncertainty as to the long-term value of the common stock of Mativ, including the dilution caused by Mativ’s issuance of additional shares of its common stock in connection with the Merger; • Changes in employment, wage and hour laws and regulations in the U.S., France and elsewhere, including the loi de Securisation de l'emploi in France, unionization rules and regulations by the National Labor Relations Board in the U.S., equal pay initiatives, additional anti-discrimination rules or tests and different interpretations of exemptions from overtime laws; • The impact of tariffs, and the imposition of any future additional tariffs and other trade barriers, and the effects of retaliatory trade measures; • Existing and future governmental regulation and the enforcement thereof that may materially restrict or adversely affect how we conduct business and our financial results; • Weather conditions, including potential impacts, if any, from climate change, known and unknown, and natural disasters or unusual weather events; • International conflicts and disputes, such as the ongoing conflict between Russia and Ukraine, which restrict our ability to supply products into affected regions, due to the corresponding effects on demand, the application of international sanctions, or practical consequences on transportation, banking transactions, and other commercial activities in troubled regions; • Compliance with the FCPA and other anti-corruption laws or trade control laws, as well as other laws governing our operations; • Risks associated with pandemics and other public health emergencies, including the continued impact of, and the governmental and third party response to, the COVID-19 pandemic and its variant strains; • The number, type, outcomes (by judgment or settlement) and costs of legal, tax, regulatory or administrative proceedings, litigation and/or amnesty programs, including those in Brazil, France and Germany; 52 • Increased scrutiny from stakeholders related to environmental, social and governance ("ESG") matters, particularly our sales of combustible products business within the tobacco industry which represented approximately 20% of the Company's net sales for the year ended December 31, 2022, as well as our ability to achieve our broader ESG goals and objectives; • The outcome and cost of the LIP-related intellectual property litigation against Glatz in Europe; • Costs and timing of implementation of any upgrades or changes to our information technology systems; • Failure by us to comply with any privacy or data security laws or to protect against theft of customer, employee and corporate sensitive information; • The impact of cybersecurity risks related to breaches of security pertaining to sensitive Company, customer, or vendor information, as well as breaches in the technology that manages operations and other business processes; and • Other factors described elsewhere in this document and from time to time in documents that we file with the SEC.
Biggest changeRisk Factors of this report, as well as the following factors: • Risks associated with the implementation of our strategic growth initiatives, including diversification, and the Company's understanding of, and entry into, new industries and technologies; • Risks associated with acquisitions, dispositions, strategic transactions and global asset realignment initiatives of Mativ, including the recent EP Divestiture; • The possibility the Company may be unable to achieve the strategic benefits of the EP Divestiture; • Adverse changes in the filtration, release liners, protective solutions, industrials and healthcare sectors impacting key ATM segment customers; • Changes in the source and intensity of competition in our commercial end-markets: filtration, protective solutions, release liners, healthcare, and industrials for ATM, and packaging and specialty papers for FBS; • Adverse changes in sales or production volumes, pricing and/or manufacturing costs in our ATM or FBS operating segments; 47 • Seasonal or cyclical market and industry fluctuations which may result in reduced net sales and operating profits during certain periods; • Risks associated with our technological advantages in our intellectual property and the likelihood that our current technological advantages are unable to continue indefinitely; • Supply chain disruptions, including the failure of one or more material suppliers, including energy, resin, fiber, and chemical suppliers, to supply materials as needed to maintain our product plans and cost structure; • Increases in operating costs due to inflation and continuing increases in the inflation rate or otherwise, such as labor expense, compensation and benefits costs; • The possibility that Mativ may be unable to successfully integrate Neenah's operations with those of Mativ and achieve expected synergies and operating efficiencies within the expected time-frames or at all; • Potential adverse reactions or changes to business relationships resulting from the Merger, including as it relates to the Company's ability to successfully renew existing client contracts on favorable terms or at all and obtain new clients; • Our ability to attract and retain key personnel, including as a result of the Merger, labor shortages, labor strikes, stoppages or other disruptions; • The substantial indebtedness Mativ has incurred and assumed in connection with the Merger and the need to generate sufficient cash flows to service and repay such debt; • Changes in general economic, financial and credit conditions in the U.S., Europe, China and elsewhere, including the impact thereof on currency exchange rates (including any weakening of the Euro and Real) and on interest rates; • A failure in our risk management and/or currency or interest rate swaps and hedging programs, including the failures of any insurance company or counterparty; • Changes in the manner in which we finance our debt and future capital needs, including potential acquisitions; • Changes in tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities; • Uncertainty as to the long-term value of the common stock of Mativ, including the dilution caused by Mativ’s issuance of additional shares of its common stock in connection with the Merger; • Changes in employment, wage and hour laws and regulations in the U.S., France and elsewhere, including the loi de Securisation de l'emploi in France, unionization rules and regulations by the National Labor Relations Board in the U.S., equal pay initiatives, additional anti-discrimination rules or tests and different interpretations of exemptions from overtime laws; • The impact of tariffs, and the imposition of any future additional tariffs and other trade barriers, and the effects of retaliatory trade measures; • Existing and future governmental regulation and the enforcement thereof that may materially restrict or adversely affect how we conduct business and our financial results; • Weather conditions, including potential impacts, if any, from climate change, known and unknown, and natural disasters or unusual weather events; • International conflicts and disputes, such as the ongoing conflict between Russia and Ukraine, the war between Israel and Hamas and the broader regional conflict in the Middle East, which restrict our ability to supply products into affected regions, due to the corresponding effects on demand, the application of international sanctions, or practical consequences on transportation, banking transactions, and other commercial activities in troubled regions; • Compliance with the FCPA and other anti-corruption laws or trade control laws, as well as other laws governing our operations; • Risks associated with pandemics and other public health emergencies, including the COVID-19 pandemic and its variant strains; • The number, type, outcomes (by judgment or settlement) and costs of legal, tax, regulatory or administrative proceedings, litigation and/or amnesty programs; • Increased scrutiny from stakeholders related to environmental, social and governance ("ESG") matters, as well as our ability to achieve our broader ESG goals and objectives; • Costs and timing of implementation of any upgrades or changes to our information technology systems; • Failure by us to comply with any privacy or data security laws or to protect against theft of customer, employee and corporate sensitive information; 48 • The impact of cybersecurity risks related to breaches of security pertaining to sensitive Company, customer, or vendor information, as well as breaches in the technology that manages operations and other business processes; and • Other factors described elsewhere in this document and from time to time in documents that we file with the SEC.
Subject to certain conditions, including the absence of a default or event of default under the Credit Agreement, the Company may request incremental loans to be extended under the Revolving Credit Facility or as additional Term Loan Facilities so long as the Company is in pro forma compliance with the financial covenants set forth in the Credit Agreement and the aggregate of such increases does not exceed $400.0 million.
Subject to certain conditions, including the absence of a default or event of default under the Credit Agreement, the Company may request incremental loans to be extended under the Revolving Credit Facility or as additional Term Loan Facilities so long as the Company is in pro forma compliance with the financial 43 covenants set forth in the Credit Agreement and the aggregate of such increases does not exceed $400.0 million.
In addition, borrowings and loans made under the amended Credit Agreement are secured by substantially all of the Company’s 47 and the guarantors’ personal property, excluding certain customary items of collateral, and will be guaranteed by the Company’s existing and future wholly-owned direct material domestic subsidiaries and by SWM Luxembourg.
In addition, borrowings and loans made under the amended Credit Agreement are secured by substantially all of the Company’s and the guarantors’ personal property, excluding certain customary items of collateral, and will be guaranteed by the Company’s existing and future wholly-owned direct material domestic subsidiaries and by SWM Luxembourg.
If the carrying amount of the reporting unit’s net assets exceeds its fair value, then an analysis will be performed to compare the implied fair value of goodwill with the carrying amount of goodwill. An impairment loss will be recognized in an amount equal to the excess of the carrying amount over its implied fair value.
If the carrying amount of the reporting unit’s net assets exceeds its fair value, then an analysis will be performed to compare the implied fair value of goodwill with the carrying amount of goodwill. An impairment loss will be recognized in an amount equal to the excess of the carrying amount over its 36 implied fair value.
Under the terms of the amended Credit Agreement, the Company is required to maintain certain financial ratios and comply with certain financial covenants, including maintaining a net debt to EBITDA ratio, as defined in the amended Credit Agreement, calculated on a trailing four fiscal quarter basis, not greater than 5.50x and an interest coverage ratio, also as defined in the amended Credit Agreement, of not less than 3.00x.
Under the terms of the amended Credit Agreement, the Company is required to maintain certain financial ratios and comply with certain financial covenants, including maintaining a net debt to EBITDA ratio, as defined in the amended Credit Agreement, calculated on a trailing four fiscal quarter basis, not greater than 4.50x and an interest coverage ratio, also as defined in the amended Credit Agreement, of not less than 3.00x.
For a comparison of the Company’s results of operations for the year ended December 31, 2021 to the year ended December 31, 2020, refer to Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the U.S.
For a comparison of the Company’s results of operations for the year ended December 31, 2022 to the year ended December 31, 2021, refer to Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the U.S.
The Company was in compliance with all of its covenants under the Indenture at December 31, 2022. For a comparison of liquidity and capital resources and the Company’s cash flow activities for the fiscal year ended December 31, 2021 and 2020, refer to Item 7.
The Company was in compliance with all of its covenants under the Indenture at December 31, 2023. For a comparison of liquidity and capital resources and the Company’s cash flow activities for the fiscal year ended December 31, 2022 and 2021, refer to Item 7.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the U.S. Securities and Exchange Commission on March 1, 2022.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the U.S. Securities and Exchange Commission on March 1, 2023.
The Company was in compliance with all of its covenants under the amended Credit Agreement at December 31, 2022. With the current level of borrowing and forecasted results, we expect to remain in compliance with our amended Credit Agreement financial covenants.
The Company was in compliance with all of its covenants under the amended Credit Agreement at December 31, 2023. With the current level of borrowing and forecasted results, we expect to remain in compliance with our amended Credit Agreement financial covenants.
Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such and should only be viewed as historical data. 53
Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such and should only be viewed as historical data. 49
During the year ended December 31, 2022, financing activities consisted primarily of $775.0 million of proceeds from borrowings under the Delayed Draw Term Loan Facility and Revolving Facility. The proceeds from the Delayed Draw Term Loan was used to repay Neenah's outstanding debt of $504.9 million upon consummation of the Merger. Refer to Note 5.
During the year ended December 31, 2022, financing activities consisted primarily of $774.9 million of proceeds from borrowings under the Delayed Draw Term Loan Facility and Revolving Facility. The proceeds from the Delayed Draw Term Loan was used to repay Neenah's outstanding debt of $504.9 million upon consummation of the Merger. Refer to Note 5.
The annual impairment tests performed on October 1, 2022 and 2021 did not indicate any impairment of intangible assets. 38 The fair value estimates used in the assessment of impairment for both goodwill and intangible assets consider historical trends in addition to significant assumptions including projections of future performance.
The annual impairment tests performed on October 1, 2023 and 2022 did not indicate any impairment of intangible assets. The fair value estimates used in the assessment of impairment for both goodwill and intangible assets consider historical trends in addition to significant assumptions including projections of future performance.
Upon the conclusion of the measurement period or final determination of the values of net assets acquired, whichever comes first, any subsequent adjustments are recorded to our consolidated financial statements. Refer to Note 5. Business Acquisitions, of the Notes to Consolidated Financial Statements for additional information.
Upon the conclusion of the measurement period or final determination of the values of net assets acquired, whichever comes first, any subsequent adjustments are recorded to our Consolidated Statements of Income (Loss). Refer to Note 5. Business Acquisition, of the Notes to Consolidated Financial Statements for additional information.
The proceeds was partially offset by $341.8 million of payments on our long-term debt, which includes a pay down of $227.0 million on our Revolving Facility, $72.2 million in cash paid for dividends declared to the Company's stockholders, and $22.1 million of payments for debt issuance costs associated with the amendment of our Credit Agreement and the Bridge Facility, as discussed in Note 14.
The proceeds were partially offset by $340.6 million of payments on our long-term debt, which includes a pay down of $227.0 million on our Revolving Facility, $72.2 million in cash paid for dividends declared to the Company's stockholders, and $22.1 million of payments for debt issuance costs associated with the amendment of our Credit Agreement and the Bridge Facility, as discussed in Note 14.
Forward-looking statements include, without limitation, those regarding the incurrence of additional debt and expected maturities of the Company’s debt obligations, the adequacy of our sources of liquidity and capital, acquisition integration and growth prospects (including international growth), the cost and timing of our restructuring actions, the impact of ongoing litigation matters and environmental claims, the amount of capital spending and/or common stock repurchases, future cash flows, purchase accounting impacts, impacts and timing of our ongoing operational excellence and other cost-reduction and cost-optimization initiatives, the impact of the COVID-19 pandemic on our operations, profitability, and cash flow, the expected benefits and accretion of the Neenah merger and Scapa acquisition and integration 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.
Forward-looking statements include, without limitation, those regarding the incurrence of additional debt and expected maturities of the Company’s debt obligations, the adequacy of our sources of liquidity and capital, acquisition integration and growth prospects (including international growth), the cost and timing of our restructuring actions, the impact of ongoing litigation matters and environmental claims, the amount of capital spending and/or common stock repurchases, future cash flows, purchase accounting impacts, impacts and timing of our ongoing operational excellence and other cost-reduction and cost-optimization initiatives, profitability, and cash flow, the expected benefits and accretion of the Neenah merger and Scapa acquisition and integration, whether the strategic benefits of the EP Divestiture can be achieved 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.
Per the terms of the Company's amended Credit Agreement, net leverage was 3.71x at December 31, 2022, versus a current maximum covenant ratio of 5.50x. The Company’s nearest debt maturity is our 6.875% senior unsecured notes which are due in 2026.
Per the terms of the Company's amended Credit Agreement, net leverage 41 was 3.93 at December 31, 2023, versus a current maximum covenant ratio of 4.50x. The Company’s nearest debt maturity is our 6.875% senior unsecured notes which are due in 2026.
Changes in these factors could materially impact our financial condition, results of operations, and our cash flows. For further information, refer to "Litigation" in Part I, Item 3, "Legal Proceedings" and Note 20. Commitments and Contingencies of the Notes to Consolidated Financial Statements.
Changes in these factors could materially impact our financial condition, results of operations, and our cash flows. For further information, refer to "Litigation" in Part I, Item 3, "Legal Proceedings" and Note 20.
Business Acquisitions in the Notes to Consolidated Financial statements for further discussion of the total Merger consideration.
Business Acquisition of the Notes to Consolidated Financial Statements for further discussion of the total Merger consideration.
Debt of the Notes to Consolidated Financial Statements, and share repurchases of $3.4 million. 45 Dividend Payments We have declared and paid cash dividends on our common stock every fiscal quarter since the second quarter of 1996.
Debt of the Notes to Consolidated Financial Statements. Dividend Payments We have declared and paid cash dividends on our common stock every fiscal quarter since the second quarter of 1996.
The maximum allowable net debt to EBITDA ratio will decrease quarterly returning to 4.50x effective as of December 2023.
The maximum allowable net debt to EBITDA ratio has decreased quarterly returning to 4.50x effective as of December 2023.
Cash paid for income taxes (net of refunds) was $26.0 million for the year ended December 31, 2022. We believe that our sources of liquidity and capital, including cash on-hand, cash generated from operations and our existing credit facilities, will be sufficient to finance our continued operations, our current growth plan, and dividend payments.
Cash paid for income taxes (net of refunds) was $37.5 million for the year ended December 31, 2023. We believe that our sources of liquidity and capital, including cash on-hand, cash generated from operations and our existing credit facilities, will be sufficient to finance our continued operations, our current and long-term growth plans, and dividend payments.
As part of the pooling agreement, the participating subsidiaries combine their cash balances in pooling accounts at JP Morgan with the ability to offset bank overdrafts of one participant against the positive cash account balances held by another participant.
As part of the pooling agreement, the participating subsidiaries combine their cash balances in pooling accounts at a third-party financial institution with the ability to offset bank overdrafts of one participant against the positive cash account balances held by another participant.
The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended, pursuant to a purchase agreement between the Company, certain subsidiaries of the Company and J.P. Morgan Securities LLC, as representative of the initial purchasers.
The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended, pursuant to a purchase agreement between the Company, certain subsidiaries of the Company and a third-party financial institution as representative of the initial purchasers.
Our liquidity is supplemented by funds available under our revolving credit facility with a syndicate of banks that is used as either operating conditions or strategic opportunities warrant. Cash Requirements As of December 31, 2022, $83.2 million of our $124.4 million of cash and cash equivalents was held by foreign subsidiaries.
Our liquidity is supplemented by funds available under our Revolving Facility with a syndicate of banks that is used as either operating conditions or strategic opportunities warrant. Cash Requirements As of December 31, 2023, $117.3 million of our $120.2 million of cash and cash equivalents was held by foreign subsidiaries.
The Credit Agreement was further amended effective February 22, 2022 to adjust the step-down schedule for the maximum net debt to EBITDA ratio. Refer to Note 14. Debt of the Notes to Consolidated Financial Statements for additional information about the Term Loan B Facility.
The Credit Agreement was further amended effective February 22, 2022 to adjust the step-down schedule for the maximum net debt to EBITDA ratio. Refer to Note 14. Debt of the Notes to Consolidated Financial Statements for additional information about the Term Loan B Facility. The balance under the Term Loan B Facility was $160.5 million as of December 31, 2023.
The balance under the Term Loan B Facility was $344.8 million as of December 31, 2022. 46 In connection with the Merger, we further amended our Credit Agreement on May 6, 2022 in order to extend the maturity of the Revolving Credit Facility and the Term Loan A Facility to May 6, 2027, and to increase the availability under the Revolving Credit Facility, subject to consummation of the Merger, to $600.0 million.
In connection with the Merger, we further amended our Credit Agreement on May 6, 2022 in order to extend the maturity of the Revolving Credit Facility and the Term Loan A Facility to May 6, 2027, and to increase the availability under the Revolving Credit Facility, subject to consummation of the Merger, to $600.0 million.
Notional Cash Pooling On November 15, 2022, certain of the Company’s subsidiaries entered into a notional cash pooling arrangement with JP Morgan to manage global liquidity requirements.
Notional Cash Pooling On November 15, 2022, certain of the Company’s subsidiaries entered into a notional cash pooling arrangement with a third-party financial institution to manage global liquidity requirements.
Borrowings under the amended Revolving Facility or the Delayed Draw Term Loan facility in U.S. dollars will bear interest, at the Company’s option, at a rate equal to either (1) a forward-looking term rate based on Term SOFR, plus the applicable margin or (2) the highest of (a) the federal funds effective rate plus 0.5%, (b) the rate of interest as published by the Wall Street Journal as the “bank prime loan” rate, and (c) one-month Term SOFR plus 1.0%, in each case plus the applicable margin.
The applicable margin for borrowings under the Term Loan A Credit Facility is expected to range from 1.25% to 2.75% for SOFR loans and from 0.25% to 1.75% for base rate loans, in each case depending on the Company’s then current net debt to EBITDA ratio. 44 Borrowings under the amended Revolving Facility or the Delayed Draw Term Loan facility in U.S. dollars will bear interest, at the Company’s option, at a rate equal to either (1) a forward-looking term rate based on Term SOFR, plus the applicable margin or (2) the highest of (a) the federal funds effective rate plus 0.5%, (b) the rate of interest as published by the Wall Street Journal as the “bank prime loan” rate, and (c) one-month Term SOFR plus 1.0%, in each case plus the applicable margin.
On February 22, 2023, we announced a cash dividend of $0.40 per share payable on March 24, 2023, to stockholders of record as of the close of business on March 7, 2023.
On February 21, 2024, we announced a cash dividend of $0.10 per share payable on March 22, 2024, to stockholders of record as of the close of business on March 8, 2024.
Property, Plant and Equipment Valuation Certain of our manufacturing processes are capital intensive; as a result, we make substantial investments in property, plant and equipment which are recorded at cost. Net property, plant and equipment comprised 24% of our total assets as of December 31, 2022.
Commitments and Contingencies of the Notes to Consolidated Financial Statements. 35 Property, Plant and Equipment Valuation Certain of our manufacturing processes are capital intensive; as a result, we make substantial investments in property, plant and equipment which are recorded at cost. Net property, plant and equipment comprised 25% of our total assets as of December 31, 2023.
The German Loan Agreement provided €10.0 million ($10.7 million as of May 30, 2022) of construction financing which is secured by the melt blown machine. Refer to Note 14. Debt for further information related to the German Loan Agreement. In December 2022, $127.0 million of cash from operations was used to repay our Revolving Facility.
The German Loan Agreement provided €10.0 million ($10.7 million as of May 30, 2022) of construction financing which is secured by the melt blown machine. Refer to Note 14. Debt of the Notes to Consolidated Financial Statements for further information related to the German Loan Agreement.
Debt Instruments and Related Covenants The following table presents activity related to our debt instruments for the years-ended (in millions): Years Ended December 31, 2022 2021 Proceeds from issuances of long-term debt $ 775.0 $ 744.5 Payments on long-term debt (341.8) (55.9) Other financing 0.3 — Net proceeds from borrowings $ 433.2 $ 688.6 Net proceeds from borrowings were $433.2 million during the year ended December 31, 2022 compared to net proceeds from borrowings of $688.6 million during the prior year-end.
Debt Instruments and Related Covenants The following table presents activity related to our debt instruments for the years-ended (in millions): Years Ended December 31, 2023 2022 Proceeds from long-term debt $ 241.0 $ 774.9 Payments on long-term debt (834.6) (340.6) Net (payments) proceeds from borrowings $ (593.6) $ 434.3 Net repayments from borrowings were $593.6 million during the year ended December 31, 2023 compared to net proceeds from borrowings of $434.3 million during the prior year-end.
The Notes are guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly owned subsidiaries that is a borrower under or that guarantees obligations under the amended Credit Agreement or that guarantees certain other indebtedness, subject to certain exceptions.
The Notes are guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly owned subsidiaries that is a borrower under or that guarantees obligations under the amended Credit Agreement or that guarantees certain other indebtedness, subject to certain exceptions. 45 The Notes were issued pursuant to an Indenture, dated as of September 25, 2018 (the “Indenture”), by and among the Company, the guarantors listed therein and a third-party financial institution, as trustee.
On May 6, 2022, the Debt Commitment Letter was amended, reducing the Bridge Facility and senior secured revolving credit facility to $50.0 million and zero, respectively. On July 5, 2022, in connection with the consummation of the Merger, the Company borrowed $650.0 million under the Delayed Draw Term Loan Facility.
On May 6, 2022, in conjunction with further amendment of our Credit Agreement, the Debt Commitment Letter was amended, reducing the commitments under the Bridge Facility and senior secured revolving credit facility to $50.0 million and zero, respectively. Upon consummation of the Merger, we terminated our Bridge Facility.
Business Combinations Accounting for business combinations requires us to recognize, separately from goodwill, the assets acquired and the liabilities assumed ("net assets") at their acquisition date fair values. Goodwill is measured as the excess of consideration transferred over the net assets acquired at their respective fair values as of the acquisition date.
Goodwill is measured as the excess of consideration transferred over the net assets acquired at their respective fair values as of the acquisition date.
(3) Results during the year ended December 31, 2020 include Tekra from the March 13, 2020 acquisition date to December 31, 2020. 40 Comparison of the Years Ended December 31, 2022 and 2021 Net Sales The following table presents net sales by segment (in millions): 2022 2021 Change Percent Change Advanced Technical Materials $ 1,396.2 $ 930.7 $ 465.5 50.0 % Fiber-Based Solutions 771.2 509.3 261.9 51.4 % Total $ 2,167.4 $ 1,440.0 $ 727.4 50.5 % Net sales of $2,167.4 million during the year ended December 31, 2022 increased $727.4 million, or 50.5% compared to the prior year-end.
(2) Results during the year ended December 31, 2021 include Scapa from the April 15, 2021 acquisition date to December 31, 2021. 38 Comparison of the Years Ended December 31, 2023 and 2022 Net Sales The following table presents net sales by segment (in millions): 2023 2022 Change Percent Change Advanced Technical Materials $ 1,610.0 $ 1,396.2 $ 213.8 15.3 % Fiber-Based Solutions 416.0 240.7 175.3 72.8 % Total $ 2,026.0 $ 1,636.9 $ 389.1 23.8 % Net sales of $2,026.0 million during the year ended December 31, 2023 increased $389.1 million, or 23.8% compared to the prior year-end.
Merger On July 6, 2022, the Company completed its previously announced merger with Neenah, Inc. ("Neenah") under the terms of an Agreement and Plan of Merger ("Merger Agreement"), pursuant to which a wholly-owned subsidiary merged with and into Neenah (the "Merger"), with Neenah surviving as a direct and wholly-owned subsidiary of the Company.
Merger On July 6, 2022, the Company completed its previously announced Merger with Neenah, pursuant to which a wholly-owned subsidiary merged with and into Neenah, with Neenah surviving as a direct and wholly-owned subsidiary of the Company. Refer to Note 5. Business Acquisition of the Notes to the Consolidated Financial Statements for further information related to the Merger.
Securities and Exchange Commission on March 1, 2022. LIQUIDITY AND CAPITAL RESOURCES Liquidity & Debt Overview As of December 31, 2022, the Company had $1,693.9 million of total debt, $124.4 million of cash, and undrawn capacity on its $600.0 million revolving line of credit facility (the "Revolving Facility") of $404.0 million.
LIQUIDITY AND CAPITAL RESOURCES Liquidity & Debt Overview As of December 31, 2023, the Company had $1,104.6 million of total debt, a decrease of $585.4 million year over year, $120.2 million of cash, and undrawn capacity on its $600.0 million revolving line of credit facility (the "Revolving Facility") of $333.6 million.
In the year ended December 31, 2022, net changes in operating working capital increased cash flow by $64.4 million primarily related to the decrease in accounts receivables as a result of the accounts receivable sales agreement entered into during the current year. Refer to Note 6. Accounts Receivable, Net for further information on our accounts receivable sales programs.
The most significant prior year working capital related cash inflow was related to the decrease in accounts receivables as a result of the accounts receivable sales agreement entered into during the prior year. Refer to Note 6. Accounts Receivable, Net of the Notes to Consolidated Financial Statements for further information on our accounts receivable sales programs.
Restructuring and Impairment Expense The following table presents restructuring and impairment expense by segment (in millions): Percent of Net Sales 2022 2021 Change 2022 2021 Advanced Technical Materials $ 17.2 $ 1.9 $ 15.3 1.2 % 0.2 % Fiber-Based Solutions 1.3 8.2 (6.9) 0.2 % 1.6 % Unallocated expenses 0.8 — 0.8 Total 19.3 $ 10.1 $ 9.2 0.9 % 0.7 % The Company incurred total restructuring and impairment expense of $19.3 million in the year ended December 31, 2022, compared to $10.1 million in the year ended December 31, 2021, an increase of $9.2 million, or 91.1%.
Nonmanufacturing Expenses The following table presents nonmanufacturing expenses (in millions): Percent Change Percent of Net Sales 2023 2022 Change 2023 2022 Selling expense $ 78.9 $ 59.8 $ 19.1 31.9 % 3.9 % 3.7 % Research and development expense 21.2 18.8 2.4 12.8 % 1.0 % 1.1 % General expense 246.0 248.5 (2.5) (1.0) % 12.1 % 15.2 % Nonmanufacturing expenses $ 346.1 $ 327.1 $ 19.0 5.8 % 17.0 % 20.0 % Nonmanufacturing expenses of $346.1 million during the year ended December 31, 2023 increased $19.0 million, or 5.8%, compared to the prior year-end primarily driven by the full-year impact of the Merger with Neenah including integration related costs. 39 Restructuring and Other Impairment Expense The following table presents restructuring and other impairment expense by segment (in millions): Percent of Net Sales 2023 2022 Change 2023 2022 Advanced Technical Materials $ 12.4 $ 17.2 $ (4.8) 0.8 % 1.2 % Fiber-Based Solutions 9.9 1.1 8.8 2.4 % 0.5 % Unallocated expenses 0.3 0.8 (0.5) Total $ 22.6 $ 19.1 $ 3.5 1.1 % 1.2 % The Company incurred total restructuring and other impairment expense of $22.6 million in the year ended December 31, 2023, compared to $19.1 million in the year ended December 31, 2022, an increase of $3.5 million, or 18.3%.
Gross Profit The following table presents gross profit (in millions): Percent Change Percent of Net Sales 2022 2021 Change 2022 2021 Net sales $ 2,167.4 $ 1,440.0 $ 727.4 50.5 % 100.0 % 100.0 % Cost of products sold 1,729.8 1,109.7 620.1 55.9 % 79.8 % 77.1 % Gross profit $ 437.6 $ 330.3 $ 107.3 32.5 % 20.2 % 22.9 % Gross profit of $437.6 million during the year ended December 31, 2022 increased $107.3 million, or 32.5%, compared to the prior year-end.
Gross Profit The following table presents gross profit (in millions): Percent Change Percent of Net Sales 2023 2022 Change 2023 2022 Net sales $ 2,026.0 $ 1,636.9 $ 389.1 23.8 % 100.0 % 100.0 % Cost of products sold 1,670.2 1,330.9 339.3 25.5 % 82.4 % 81.3 % Gross profit $ 355.8 $ 306.0 $ 49.8 16.3 % 17.6 % 18.7 % Gross profit of $355.8 million during the year ended December 31, 2023 increased $49.8 million, or 16.3%, compared to the prior year-end.
Additionally, we added a $650.0 million delayed draw term loan facility (the "Delayed Draw Term Loan Facility") to be funded concurrent with the closing of the Merger. Unused borrowing capacity under the amended Credit Agreement was $404.0 million as of December 31, 2022.
Additionally, we added a $650.0 million delayed draw term loan facility (the "Delayed Draw Term Loan Facility") to be funded concurrent with the closing of the Merger. On July 5, 2022, in connection with the consummation of the Merger, the Company borrowed $650.0 million under the Delayed Draw Term Loan Facility.
Cash used in investing activities in the current year reflects Merger consideration of $518.5 million related to the repayment on Neenah’s outstanding debt (refer below in “Cash Provided by Financing Activities” for additional discussion) and acquisition related costs incurred by Neenah, partially offset by $55.9 million cash acquired. Refer to Note 5.
Cash used in investing activities in the prior year reflects Merger consideration of $518.5 million related to the repayment on Neenah’s outstanding debt and acquisition related costs incurred by Neenah, partially offset by $55.9 million cash acquired. In addition, capital spending in the prior year was $45.6 million, partially offset by $35.8 million received from settlement of cross-currency swap contracts.
In the ATM segment, the Company incurred $17.2 million of restructuring and impairment expenses in the year ended December 31, 2022, of which $13.9 million was related to the write-down of certain assets in conjunction with the divestiture of a portion of the legacy SWM ATM segment serving the industrials end-market.
The Company recognized $17.2 million of restructuring and other impairment expense in the prior-year period in the ATM segment primarily due to a $12.9 million impairment of certain assets in conjunction with the divestiture of a portion of the ATM segment serving the industrials end market.
Commitments and Contingencies of the Notes to Consolidated Financial Statements, interest expense increased mainly due to the incremental expense of assuming Neenah's debt and higher average floating interest rates. The weighted average effective interest rate on our debt facilities, including the impact of interest rate hedges, was approximately 5.11% and 4.04% for the years-ended December 31, 2022 and 2021, respectively.
The weighted average effective interest rate on our debt facilities, including the impact of interest rate hedges, was approximately 5.98% and 5.11% for the years-ended December 31, 2023 and 2022, respectively.
Cash Provided by Operations Net cash provided by operations was $202.2 million in the year ended December 31, 2022, compared with $58.1 million in the prior year. The increase was primarily related to favorable year-over-year movements in working capital related cash flows, as well as cash realized from favorable interest rate swaps.
Cash Provided by Operations Net cash provided by operations was $76.6 million in the year ended December 31, 2023, compared with $124.6 million in the prior year. The decrease was related to year-over-year movements in working capital related cash flows.
The Company has put in place remediation measures designed to help prevent future similar attacks and has proactively undertaken to implement certain other enhancements to its security system. 35 CRITICAL ACCOUNTING ESTIMATES We disclose those accounting estimates that we consider to be significant in determining the amounts to be utilized for communicating our consolidated financial position, results of operations and cash flows in the first note to our consolidated financial statements included elsewhere herein.
Segment Information of the Notes to the Consolidated Financial Statements for information on our segments after the Merger. 34 CRITICAL ACCOUNTING ESTIMATES We disclose those accounting estimates that we consider to be significant in determining the amounts to be utilized for communicating our consolidated financial position, results of operations and cash flows in the first note to our consolidated financial statements included elsewhere herein.
Cash Used in Investing Cash used for investing activities in the year ended December 31, 2022 was $481.3 million compared to $636.5 million in the prior year.
Cash Provided by Financing Activities Cash used in financing activities in the year ended December 31, 2023 was $662.0 million compared to cash provided by financing activities of $332.5 million in the prior year.
The decline in profitability was due to higher input costs. Net Income (Loss) and Loss per Share Net loss in the year ended December 31, 2022 was $6.6 million, or $0.18 per diluted share, compared to net income of $88.9 million, or $2.80 per diluted share, during the prior year period.
Net Loss and Loss per Share Net loss in the year ended December 31, 2023 was $507.7 million, or $9.33 per diluted share, compared to net loss of $68.9 million, or $1.64 per diluted share, during the prior year period.
Our total debt to capital ratios, as calculated under the amended Credit Agreement, at December 31, 2022 and December 31, 2021 were 59.0% and 65.1%, respectively. Indenture for 6.875% Senior Unsecured Notes Due 2026 On September 25, 2018, the Company closed a private offering of $350.0 million of 6.875% senior unsecured notes due 2026 (the “Notes”).
Indenture for 6.875% Senior Unsecured Notes Due 2026 On September 25, 2018, the Company closed a private offering of $350.0 million of 6.875% senior unsecured notes due 2026 (the “Notes”).
As such , we currently expect our share of the net payments to be insignificant during 2022. 50 OUTLOOK For the ATM segment, we expect our growth outlook to be driven by macro factors affecting our five served end-markets – filtration, protective solutions, release liners, healthcare, and industrials – as well as industry demand for many of our key applications.
For both segments, we expect our growth outlook to be driven by macro factors affecting our served end-markets, as well as industry demand for many of our key applications.
Borrowings under the Term Loan B Facility will bear interest, at the Company's option, at either (i) 3.75% in excess of a reserve adjusted LIBOR rate (subject to a minimum floor of 0.75% or (ii) 2.75% in excess of an alternative base rate.
Borrowings under the Term Loan B Facility will bear interest, equal to a forward-looking term rate based on Term SOFR (subject to a minimum floor of 0.75%) plus 2.75%. Borrowings under the Term Loan B Facility in Euros will bear interest equal to EURIBOR (subject to a minimum floor of 0%) plus 3.75%.
We expect our healthcare products to deliver growth exceeding GDP, or other global growth benchmarks, over the long-term due to the relative strong demand for the specific products we provide. Generally, we believe our sales into the industrial end-market will perform relatively in line with long-term broad economic growth in the U.S. and to some extent Europe and China.
For the SAS segment, we generally expect to deliver growth relatively in line with long-term broad economic growth in the U.S. and to some extent Europe and China.
In the ATM segment, operating profit in the year ended December 31, 2022 was $98.8 million compared to $61.6 million in the year ended December 31, 2021, an increase of 60.4%. In the FBS segment, operating profit in the year ended December 31, 2022 was $106.6 million, an increase of $6.1 million, or 6.1%, compared to the prior year-end.
Goodwill of the Notes to Consolidated Financial Statements. In the FBS segment, operating profit 40 in the year ended December 31, 2023 was $4.6 million, a decrease of $10.4 million, or 69.3%, compared to the prior year-end.
In addition, the Company incurred an incremental $29.4 million of non-cash purchase accounting expenses related to the Neenah merger. 39 RESULTS OF OPERATIONS Years Ended December 31, 2022 (1) 2021 (2) 2020 (3) (in millions, except per share amounts) Net sales $ 2,167.4 $ 1,440.0 $ 1,074.4 Cost of products sold 1,729.8 1,109.7 766.1 Gross profit 437.6 330.3 308.3 Selling expense 74.2 46.7 36.9 Research and development expense 26.6 20.3 13.8 General expense 266.1 169.9 116.9 Total nonmanufacturing expenses 366.9 236.9 167.6 Restructuring and impairment expense 19.3 10.1 11.9 Operating profit 51.4 83.3 128.8 Interest expense 86.1 46.1 30.5 Other income (expense), net 10.3 35.9 (1.0) Income (Loss) before income taxes and income from equity affiliates (24.4) 73.1 97.3 Income tax expense (benefit) (12.6) (9.4) 18.4 Income from equity affiliates, net of income taxes 5.2 6.4 4.9 Net income (loss) $ (6.6) $ 88.9 $ 83.8 Dividends paid to Common Stockholders (0.9) (0.6) (0.7) Undistributed earnings available to Common Stockholders — (0.5) (0.4) Net income (loss) attributable to Common Stockholders $ (7.5) $ 87.8 $ 82.7 Net income (loss) per share Basic $ (0.18) $ 2.83 $ 2.68 Diluted $ (0.18) $ 2.80 $ 2.66 (1) Results during the year ended December 31, 2022 include Neenah from the July 6, 2022 acquisition date to December 31, 2022.
The Company also incurred restructuring and other impairment charges of $22.6 million and $19.1 million, in 2023 and 2022, respectively, primarily related to exiting certain end markets and site closures. 37 RESULTS OF OPERATIONS Years Ended December 31, 2023 2022 (1) 2021 (2) (in millions, except per share amounts) Net sales $ 2,026.0 $ 1,636.9 $ 930.7 Cost of products sold 1,670.2 1,330.9 747.5 Gross profit 355.8 306.0 183.2 Selling expense 78.9 59.8 32.5 Research and development expense 21.2 18.8 11.8 General expense 246.0 248.5 153.2 Total nonmanufacturing expenses 346.1 327.1 197.5 Goodwill impairment expense 401.0 — — Restructuring and other impairment expense 22.6 19.1 1.9 Operating loss (413.9) (40.2) (16.2) Interest expense 62.2 57.3 40.4 Other income (expense), net (4.8) 1.0 30.1 Loss from continuing operations before income taxes (480.9) (96.5) (26.5) Income tax (expense) benefit (26.8) 27.6 28.2 Net income (loss) from continuing operations (507.7) (68.9) 1.7 Income from discontinued operations, net of tax 198.2 62.3 87.2 Net income (loss) $ (309.5) $ (6.6) $ 88.9 Dividends to participating securities (0.7) (0.9) (0.6) Undistributed earnings available to participating securities — — (0.5) Net income (loss) attributable to common stockholders $ (310.2) $ (7.5) $ 87.8 Net income (loss) per share from continuing operations Basic $ (9.33) $ (1.64) $ 0.02 Diluted $ (9.33) $ (1.64) $ 0.02 (1) Results during the year ended December 31, 2022 include Neenah from the July 6, 2022 acquisition date to December 31, 2022.
Unallocated expenses in the year ended December 31, 2022 were $154.0 million, an increase of $75.2 million, or 95.4%, compared to the prior year-end. The increase was primarily due to $72.6 million in merger and integration costs related to the Merger, the addition of Neenah's unallocated expenses, and expenses related to the cybersecurity incident.
Unallocated expenses in the year ended December 31, 2023 were $137.0 million, a decrease of $17.0 million, or 11.0%, compared to the prior year-end. The decrease compared to the prior year period is primarily due to the higher integration related costs incurred in the prior year period.
Share Repurchases In 2022 and 2021, we repurchased 273,027 shares and 78,790 shares, respectively, of our common stock at a cost of $6.9 million and $3.4 million, respectively, for the value of employees' stock-based compensation share awards surrendered to satisfy their personal statutory income tax withholding obligations.
Shares that are not part of the buyback program are repurchased for the value of employees' stock-based compensation share awards surrendered to satisfy their personal statutory income tax withholding obligations.
Interest Expense Interest expense was $86.1 million in the year ended December 31, 2022, an increase of $40.0 million, or 86.8%, compared to the year ended December 31, 2021. Excluding a benefit of $4.5 million prior year expense reversal related to the favorable settlement of Brazil tax assessments as discussed in Note 20.
Other Income (Expense), Net Other income (expense), net was expense of $4.8 million in the year ended December 31, 2023 compared to income of $1.0 million for the year ended December 31, 2022, an increase in expense of $5.8 million. The increase in expense was driven by legal and tax settlement expenses.
We also had availability under our bank overdraft facilities and lines of credit of $1.7 million as of December 31, 2022. We had obtained financing commitments for a $648.0 million senior 364-day unsecured bridge facility and $500.0 million senior secured revolving credit facility in conjunction with the proposed Merger.
Debt Commitment Letter Prior to the Merger, we obtained financing commitments for (i) a $648.0 million senior 364-day unsecured bridge facility (the “Bridge Facility”) and (ii) a $500.0 million senior secured revolving credit facility pursuant to a commitment letter (the “Debt Commitment Letter”) dated as of March 28, 2022.
The Company incurred significant merger and divestiture expenses that impacted net income, which included $72.6 million of expenses related to the Neenah merger and associated integration, as well as $19.3 million of restructuring and impairment costs primarily related to the divestiture of a financially immaterial portion of the business that served the industrials end-market.
The Company incurred significant integration and divestiture expenses that impacted net income of $43.2 million and $72.7 million, in 2023 and 2022, respectively, related to the Merger and associated integration, and divestiture costs related costs related to the sale of the EP Business.
During prior year ended December 31, 2021, financing activities consisted primarily of $744.5 million proceeds from borrowings under the revolving credit facility, primarily to fund the Scapa acquisition including $350.0 million under the Term Loan B Facility and $343.0 million incremental borrowings of revolver loans, $55.9 million payments on long-term debt, $55.3 million in cash paid for dividends declared to stockholders, the buyout of leased property at Knoxville for $15.4 million, $14.6 million payment for debt issuance costs associated with the amendment of our Credit Agreement as discussed in Note 14.
During the year ended December 31, 2023, 42 financing activities primarily consisted of payments on our long-term debt of $834.6 million, $241.0 million of borrowings under the revolving credit facility and $55.3 million of dividends paid to the Company's stockholders.
ATM gross profit increased $87.6 million, or 47.8% and FBS gross profit increased $19.7 million, or 13.4%, which reflected the addition of the Neenah operations, organic growth, as well as price increases more than offsetting higher input costs, including pulps and fibers, resins, and energy.
ATM gross profit increased $35.4 million, or 13.1% and FBS gross profit increased $14.4 million, or 40.9%, which reflected the full-year impact of the Merger with Neenah, as well as price increases and lower input costs.
Debt of the Notes to Consolidated Financial Statements.
For more information on the goodwill impairment, refer to Note 10. Goodwill of the Notes to Consolidated Financial Statements.
(6) Minimum purchase obligations for raw materials include our calcium carbonate purchase agreement at our plant in Quimperlé, France. (7) Purchase obligations for energy including natural gas, electricity, and steam. (8) On December 22, 2017, the United States enacted the Tax Act into law, which requires a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries.
Tax Act Transaction Obligations. On December 22, 2017, the United States enacted the Tax Act into law, which requires a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries. Companies may elect to pay the tax over eight years based on an installment schedule outlined in the Tax Act.
ATM segment net sales increased $465.5 million, or 50.0%, compared to prior year primarily driven by the addition of the Neenah operations, with strong growth in release liners, and protective solutions.
ATM and FBS segment net sales increased $213.8 million, or 15.3% and $175.3 million, or 72.8%, respectively, compared to prior year primarily driven by the full-year impact of the Merger with Neenah. The increase in net loss in 2023 compared to 2022 was primarily due to the goodwill impairment recorded of $401.0 million.
There were no unallocated expenses related to restructuring in the prior year-end. 42 Operating Profit The following table presents operating profit by segment (in millions): Percent Change Return on Net Sales 2022 2021 Change 2022 2021 Advanced Technical Materials $ 98.8 $ 61.6 $ 37.2 60.4 % 7.1 % 6.6 % Fiber-Based Solutions 106.6 100.5 6.1 6.1 % 13.8 % 19.7 % Unallocated expenses (154.0) (78.8) (75.2) (95.4) % Total $ 51.4 $ 83.3 $ (31.9) (38.3) % 2.4 % 5.8 % Operating profit was $51.4 million in the year ended December 31, 2022, compared to $83.3 million in the year ended December 31, 2021, a decrease of $31.9 million, or 38.3%.
In the prior-year period, restructuring and other impairment expense in the FBS segment of $1.1 million was related to closed facilities. Operating Profit (Loss) The following table presents operating profit (loss) by segment (in millions): Percent Change Return on Net Sales 2023 2022 Change 2023 2022 Advanced Technical Materials $ (281.5) $ 98.8 $ (380.3) N.M.
The assets were sold during the third quarter for net proceeds of $4.6 million and a loss of $0.4 million. The remaining $3.3 million of restructuring and impairment expenses is primarily related to the termination of a contract with an existing customer and the closure of the Appleton, Wisconsin facility, a facility acquired through the Merger.
The assets were sold during the third quarter of 2022 for net proceeds of $4.6 million and a loss of $0.4 million. In the FBS segment, the Company incurred $9.9 million of restructuring and other impairment expense for the year ended December 31, 2023 related to long-lived assets at our Eerbeek, Netherlands facility.
ATM segment net sales of $1,396.2 million during the year ended December 31, 2022 increased $465.5 million, or 50.0% compared to prior year-end. Sales reflected the addition of the Neenah operations, organic sales growth from price increases and volume growth across the product lines, and negative currency impacts.
ATM segment net sales of $1,610.0 million during the year ended December 31, 2023 increased $213.8 million, or 15.3% compared to prior year-end. Sales reflected the full-year impact of the Merger with Neenah, and lower volumes partly offset by higher selling prices and favorable currency translation.
After an impairment loss is recognized, the adjusted carrying amount of goodwill is its new accounting basis. The annual impairment tests performed on October 1, 2022 and 2021 did not indicate any impairment of goodwill.
Goodwill, of the Notes to Consolidated Financial Statements for additional information. The annual impairment test performed on October 1, 2023 and 2022 did not indicate any further impairment of goodwill.
The Company incurred significant costs for advisory fees, transaction expenses, and integration costs all related to the Merger. 44 Working Capital As of December 31, 2022, we had net operating working capital of $544.1 million including cash and cash equivalents of $124.4 million, compared with net operating working capital of $366.7 million including cash and cash equivalents of $74.7 million as of December 31, 2021.
Working Capital As of December 31, 2023, we had net operating working capital (excluding Current assets held for sale of discontinued operations and Current liabilities held for sale of discontinued operations) of $433.9 million including cash and cash equivalents of $120.2 million, compared with net operating working capital of $411.7 million including cash and cash equivalents of $101.1 million as of December 31, 2022.
Removed
Pursuant to the Merger Agreement, each share of Neenah common stock outstanding was exchanged for 1.358 shares of common stock in the Company. As a result of the Merger, the Company issued approximately 22.8 million shares of its common stock to Neenah shareholders under the terms of the Merger Agreement.
Added
As discussed in Note 9. Discontinued Operations of the Notes to Consolidated Financial Statements, the results from continuing operations exclude the results of our EP Business for all periods presented. All information presented within this MD&A is on a continuing operations basis.
Removed
Based on our closing stock price on July 5, 2022, the total value of shares issued to Neenah shareholders was approximately $534.1 million. Upon completion of the Merger, the Company changed its name to Mativ Holdings, Inc.
Added
EP Divestiture On August 1, 2023, the Company entered into the Offer Letter with Evergreen Hill Enterprise pursuant to which Evergreen Hill Enterprise made the Offer to acquire the Company’s EP Business for $620.0 million in cash, subject to customary closing date adjustments.
Removed
Shares of the Company's common stock commenced trading on the New York Stock Exchange under the ticker symbol "MATV" as of market open on July 6, 2022. The Company's previous ticker symbol was "SWM". Refer to Note 5. Business Acquisitions in the Notes to Consolidated Financial Statements for further information related to the Merger.
Added
Pursuant to the terms of the Offer Letter, following the conclusion of the French Consultation Process, the Company accepted Evergreen Hill Enterprise's Offer and countersigned the Purchase Agreement, with respect to the EP divestiture on October 4, 2023. On November 30, 2023 the Company completed the sale of the EP Business.
Removed
Prior to the completion of the Merger, we operated in two reporting segments: Advanced Materials & Structures and Engineered Papers. Effective with the Merger, the reporting segments are: Advanced Technical Materials ("ATM") and Fiber-Based Solutions ("FBS"). ATM is comprised of the legacy SWM Advanced Materials & Structures segment and FBS is comprised of the legacy SWM Engineered Papers segment.
Added
With the sale of the EP business, Mativ ceased participating in tobacco-based products markets. Effective with the Offer, the EP business is presented as a discontinued operation for all periods presented. Current and non-current assets and liabilities of the EP business are classified as held for sale, and certain prior period amounts have been retrospectively revised to reflect these changes.
Removed
As such, there were no changes to the historical results of these segments. The merged Neenah segments have been allocated to ATM and FBS based on performance, market focus, technologies, and reporting structure. Refer to Note 21. Segment Information in the Notes to Consolidated Financial Statements for further information on our segments.
Added
The consolidated financial statements and the notes thereto, unless otherwise indicated, are on a continuing operations basis. Refer to Note 9. Discontinued Operations of the Notes to Consolidated Financial Statements for more information on the discontinued operation and transaction.

… 89 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

19 edited+1 added−7 removed17 unchanged
Biggest changeOur European operations are more fully exposed to currency transaction risk, especially as a result of U.S. dollar, euro, and British pound denominated sales in countries where these currencies are non-functional. Additionally, changes in foreign currency exchange rates may have an impact on the amount reported in Other income (expense), net.
Biggest changeThis can result in more or less local currency revenue or cost related to such transaction and thus have an effect on our operating profit. Our European operations are more fully exposed to currency transaction risk, especially as a result of U.S. dollar, euro, and British pound denominated sales in countries where these currencies are non-functional.
As a result, we do not believe that the substitution of such alternative pulp or specialty chemicals would have a material effect on our operations in the long run. 55 We believe that, while our exposure to commodity price risk is material to our results of operations, our customers understand such risk and over time changes in the price of the commodities used in our manufacturing processes are typically reflected in selling prices.
As a result, we do not believe that the substitution of such alternative pulp or specialty chemicals would have a material effect on our operations in the long run. 51 We believe that, while our exposure to commodity price risk is material to our results of operations, our customers understand such risk and over time changes in the price of the commodities used in our manufacturing processes are typically reflected in selling prices.
Periodically, when we believe it is appropriate to do so, we enter into agreements to procure a portion of our energy for future periods in order to reduce the uncertainty of future energy costs. However, in recent years this has only marginally slowed the increase in energy costs due to the volatile changes in energy prices we have experienced. 56
Periodically, when we believe it is appropriate to do so, we enter into agreements to procure a portion of our energy for future periods in order to reduce the uncertainty of future energy costs. However, in recent years this has only marginally slowed the increase in energy costs due to the volatile changes in energy prices we have experienced. 52
With respect to our purchased energy price risk, a hypothetical 10% change in per unit prices would impact our future annual pre-tax earnings by approximately $11.6 million, assuming no compensating change in our selling prices.
With respect to our purchased energy price risk, a hypothetical 10% change in per unit prices would impact our future annual pre-tax earnings by approximately $6.0 million, assuming no compensating change in our selling prices.
Additionally, the per ton cost of wood pulp is cyclical in nature and more volatile than general inflation. During the period from January 2017 through December 2022, the U.S. list price of northern bleached softwood kraft pulp ("NBSK") a representative pulp grade that we use, ranged between $1,000 to $1,800 per ton.
Additionally, the per ton cost of wood pulp is cyclical in nature and more volatile than general inflation. During the period from January 2017 through December 2023, the U.S. list price of northern bleached softwood kraft pulp ("NBSK") a representative pulp grade that we use, ranged between $1,000 to $1,700 per ton.
The average list price of NBSK for the year of 2022 was $1,700 per ton. We normally maintain approximately 50 to 90 days of inventories to support our operations. As a result, there is a lag in the impact of changes in the per ton list price of resin and wood pulp on our cost of products sold.
The average list price of NBSK for the year of 2023 was $1,500 per ton. We normally maintain approximately 50 to 90 days of inventories to support our operations. As a result, there is a lag in the impact of changes in the per ton list price of resin and wood pulp on our cost of products sold.
These hypothetical gains or losses on foreign currency transactional exposures are based on the December 31, 2022 rates and the assumed rates.
These hypothetical gains or losses on foreign currency transactional exposures are based on the December 31, 2023 rates and the assumed rates.
With respect to our commodity price risk, a hypothetical 10% change in per ton resin prices would impact our future annual pre-tax earnings by approximately $27.6 million, assuming no compensating change in our selling prices.
With respect to our commodity price risk, a hypothetical 10% change in per ton resin prices would impact our future annual pre-tax earnings by approximately $21.4 million, assuming no compensating change in our selling prices.
With respect to our variable-rate debt outstanding at December 31, 2022, a 100 basis point increase in interest rates would result in a $4.0 million decrease to our future annual pre-tax earnings, taking into account the effect of the interest rate hedge transactions the Company has entered into as of December 31, 2022.
With respect to our variable-rate debt outstanding at December 31, 2023, a 100 basis point increase in interest rates would result in a $2.6 million decrease to our future annual pre-tax earnings, taking into account the effect of the interest rate hedge transactions the Company has entered into as of December 31, 2023.
As of December 31, 2022, a 10% unfavorable change in the exchange rate of our functional currencies and those of our subsidiaries against the prevailing market rates of non-local currencies involving our transactional exposures would have resulted in a net pre-tax loss of approximately $16.0 million.
As of December 31, 2023, a 10% unfavorable change in the exchange rate of our functional currencies and those of our subsidiaries against the prevailing market rates of non-local currencies involving our transactional exposures would have resulted in a net pre-tax loss of approximately $44.1 million.
We utilize forward and swap contracts and, to a lesser extent, option contracts to selectively hedge our exposure to foreign currency transaction risk when it is practical and economical to do so.
We utilize forward and swap contracts to selectively hedge our exposure to foreign currency transaction risk when it is practical and economical to do so.
As of December 31, 2022, 20.8% and 79.2% of the Company's total debt was fixed and floating interest rate debt, respectively. The Company has entered into a number of interest rate hedge transactions to convert floating rate debt to fixed. Refer to Note 15. Derivatives, of the Notes to Consolidated Financial Statements for additional information.
As of December 31, 2023, 31.0% and 69.0% of the Company's total debt was fixed and floating interest rate debt, respectively. The Company has entered into a number of interest rate hedge transactions to convert floating rate debt to fixed. Refer to Note 15. Derivatives of the Notes to Consolidated Financial Statements for additional information.
In the event of an interruption of production at any one supplier, we believe that each of these suppliers individually would be able to satisfy our short-term requirements for specialized pulp or specialty chemicals.
We expect these relationships to continue to operate in a satisfactory manner in the future. In the event of an interruption of production at any one supplier, we believe that each of these suppliers individually would be able to satisfy our short-term requirements for specialized pulp or specialty chemicals.
Including the impact of these transactions, as of December 31, 2022, the percentage of the Company’s debt subject to fixed and floating rates of interest was 77.1% and 22.9%, respectively. 54 Commodity Price Risk We are subject to commodity price risks from our purchases of raw materials, including resin and wood pulp.
Including the impact of these transactions, as of December 31, 2023, the percentage of the Company’s debt subject to fixed and floating rates of interest was 77.0% and 23.0%, respectively. 50 Commodity Price Risk We are subject to commodity price risks from our purchases of raw materials, including resin and wood pulp.
Due to the competitive pricing in the markets for most of our products, we are typically unable to fully pass-through higher energy costs to our customers.
Currently, while energy prices remain elevated versus historical levels, supplies appear to be stable. Due to the competitive pricing in the markets for most of our products, we are typically unable to fully pass-through higher energy costs to our customers.
With respect to our commodity price risk, a hypothetical 10% change in per ton wood pulp prices would impact our future annual pre-tax earnings by approximately $24.8 million, assuming no compensating change in our selling prices. Our ATM segment acquires certain specialized pulp from two global suppliers and certain critical specialty chemicals from a limited number of suppliers.
With respect to our commodity price risk, a hypothetical 10% change in per ton wood pulp prices would impact our future annual pre-tax earnings by approximately $12.8 million, assuming no compensating change in our selling prices.
We have utilized various forms of interest rate hedge agreements, including interest rate swap agreements and forward rate agreements. We utilize variable-to-fixed interest rate swap agreements, typically with contractual terms no longer than 60 months, which serve to convert a portion of our outstanding variable rate debt to a fixed rate.
We have utilized various forms of interest rate hedge agreements, including interest rate swap agreements and forward rate agreements. We utilize variable-to-fixed interest rate swap agreements, which serve to convert a portion of our outstanding variable rate debt to a fixed rate. Various outstanding interest-bearing instruments are sensitive to changes in interest rates.
Even where we do not have fixed-price agreements, we generally cannot pass through increases in raw material costs in a timely manner and in many instances are not able to pass through the entire increase to our customers.
Even where we do not have fixed-price agreements, we may be limited in our ability to pass through increases in raw material costs in a timely manner or may be unable to pass through increases to our customers in whole or in part.
In general, these supply arrangements are covered by formal contracts and represent multi-year business relationships that have historically been sufficient to meet our needs. We expect these relationships to continue to operate in a satisfactory manner in the future.
Our ATM segment acquires certain specialized pulp from a limited number of global suppliers and certain critical specialty chemicals from a limited number of suppliers. In general, these supply arrangements are covered by formal contracts and represent multi-year business relationships that have historically been sufficient to meet our needs.
Removed
This can result in more or less local currency revenue or cost related to such transaction and thus have an effect on our operating profit. Currency transaction risk is mitigated partially in France as some of the revenue and expense transactions of our French subsidiaries are denominated in U.S. dollars, providing a degree of natural hedging.
Added
Additionally, changes in foreign currency exchange rates may have an impact on the amount reported in Other income (expense), net.
Removed
We expect to continue to apply foreign currency hedging in our Brazilian and Polish operations for the foreseeable future.
Removed
Various outstanding interest-bearing instruments are sensitive to changes in interest rates.
Removed
Currently, while energy prices remain elevated versus historical levels, supplies appear to be stable. In Brazil, where that country's production of electricity is heavily reliant upon hydroelectric plants, availability of electricity has been affected in the past by rain variations.
Removed
Although our Brazilian business currently has a sufficient supply of energy to continue its current level of operation, there can be no assurance that we will have sufficient electricity in the future, or that costs will remain stable.
Removed
We have the ability to generate substantially all of the electrical energy used by our Munising mill and approximately 30 percent of the electrical energy at our Bruckmühl, Germany mill.
Removed
Availability of energy is not expected to be a problem in the foreseeable future, but the purchase price of such energy can and likely will fluctuate significantly based on fluctuations in demand and other factors.

Other MATV 10-K year-over-year comparisons