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Operator: Good day, and welcome to the Magnera Corp. Second Quarter 2026 Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. To ask a question, you will need to press 11 on your touchtone telephone. Please note this call is being recorded. I would now like to turn the call over to Robert Weilminster, Vice President of Investor Relations. Please go ahead.

Robert Weilminster: Thank you, Operator, and thank you, everyone, for joining Magnera Corp.’s second fiscal quarter 2026 earnings call. Joining me, I have Magnera Corp.’s Chief Executive Officer, Curtis L. Begle, and Chief Financial Officer, James M. Till. Following our prepared remarks, we will have a question-and-answer session. To allow everyone the opportunity to participate, we ask that you limit yourself to one question with a brief follow-up, then fall back into the queue for any additional questions. A few things to note before handing over the call. On our website at magnera.com, you can find today’s press release and earnings call presentation under Investor Relations. You can also go directly to ir.magnera.com to review the investor presentations from our recent conference attendance.

Our annual report and proxy statements with the SEC can be found on our website under Investor Relations. As referenced on Slide 2 during the call, we will be discussing certain non-GAAP financial measures. These measures are reconciled to the most directly comparable GAAP financial measures in our earnings press release and in the appendix of the presentation available on our website. Additionally, a reminder that we will make certain forward-looking statements. These statements are made based upon management’s expectations and beliefs concerning future events impacting the company and therefore are subject to risks and uncertainties. Actual results or outcomes may differ materially from those expressed or implied in our forward-looking statements.

Some factors that could cause the results or outcomes to differ are in the company’s latest SEC filings and our news releases. These statements speak only as of today, and we undertake no obligation to update them. I will now turn the call over to Magnera Corp.’s CEO, Curtis L. Begle.

Curtis L. Begle: Thank you, Robert. Good morning, and thank you for joining our call. I am pleased to present our second quarter results and highlight our performance amid ongoing macroeconomic uncertainty. My remarks today will focus on four key themes. First, our earnings of $90 million of adjusted EBITDA were in line with expectations after adjusting for weather-related factors highlighted during our February earnings call. Our strong free cash flow enabled us to pay down $36 million of debt in the quarter. Second, I will discuss the winter storms that affected more than 50% of the United States, causing significant supply chain disruptions impacting both our customers’ operations and our own. Third, the war in the Middle East has created global challenges on many fronts, including having a direct impact on our raw material and supply chain costs.

Lastly, I will discuss how Magnera Corp. has responded to these challenges and continues to strategically invest in our business to position us for future success. The global economic environment remains strained, though there are signs of resilience within the Americas. Elsewhere, we continue to encounter tempered demand, particularly in Europe. Compounding these challenges, new geopolitical conflicts have contributed to higher operational costs and further supply chain disruptions. Magnera Corp.’s scale and global footprint are built for times like this. Through localized sourcing, disciplined cost management, and success in Project CORE initiatives, we have mitigated many of these impacts. We remain focused on managing our controllables.

As mentioned, our largest region, North America, was impacted by back-to-back winter storms, Fern and Hernando. Fern required the temporary shutdown of 13 manufacturing sites, resulting in lost production and impacting shipping days depending on the location. The second storm, Hernando, affected seven plants, but as with Fern, there was no significant damage and shipping resumed. We anticipate recouping most weather-related setbacks in the second half of the fiscal year. Transportation lanes remained tight in the quarter and are expected to require additional time to stabilize. Our teams did an excellent job responding to the storms by working together to prioritize the safety of our employees and assets. As the weather improved, our teams quickly assessed impacts and initiated plans to restart production and supply to our customers.

We had no major weather-related damage at our plants. Next, I want to talk about how the conflict in Iran impacted us in the quarter. Our strategic principles to procure, manufacture, and sell within our regions provide a competitive advantage given our extensive asset base and leading positions in specialty materials. The majority of our business is sourced and sold locally within the respective regions, providing us and our customers reliability of supply. The rising cost in raw materials, fuel, container shipping, and delivery times, notably affecting resin, pulp, and energy expenses, constitute approximately 70% of our cost of goods sold. Additionally, inbound and outbound transportation expenses have increased. To address these pressures, we are working closely with customers to transition pricing mechanisms to a monthly cadence, helping mitigate timing lags in cost recovery.

While enhancements to our global energy program have helped offset some of the increased costs, prices remain above pre-pandemic levels. Further details on the financial impact and working capital implications will be provided by James in his update. Before transitioning to James, I want to reiterate the resilience demonstrated by our organization in a persistently challenging market. In the Americas, industrial activity remains subdued, despite signs of stability as the sector contends with tariffs, geopolitical uncertainty, and policy ambiguity. The U.S. economy persists in a stable yet cautious state, while South America shows early signs of improvement following proactive measures addressing deflationary pressures and elevated transport costs from Asia.

We expect a stronger performance in the latter half of the year in this region, and excluding weather impacts, volumes in the Americas would have reflected a positive year-over-year increase. In Europe, the manufacturing index has seen modest improvements; however, business sentiment remains cautious, mirroring trends from recent years. In the rest of world, year-over-year volume change was down 4%. We achieved mid-single-digit volume increases globally in infrastructure product lines driven by seasonality and continued emphasis on consumer solutions. Adult personal care categories, especially incontinence and feminine hygiene, also experienced solid growth, supported by demographic shifts and higher consumer adoption. Initiatives from governments and NGOs to destigmatize incontinence products, combined with customers’ preferences for innovative and premium features, have bolstered demand.

We are investing in our business for growth and improving our competitive position. We initiated two critical projects at our Gernsbach and Lidney facilities that will reduce our energy consumption and help advance our sustainability agenda. Our Lidney project will reduce our electricity and water usage by installing modern vacuum blowers. We appreciate the support from the Industrial Energy Transformation Organization in our decarbonization efforts. Our team at Don Buell recently commissioned a new film asset that will modernize our product offering for elastic backsheets in hygiene, generate new volume, and provide energy, raw material, and plant efficiency improvements. Each of these investments is aligned with our capital allocation strategy and demonstrates our commitment to improving our business over the long term.

Finally, I would like to highlight the ambitious commitments detailed in our latest corporate sustainability report. This document underscores our resolve to operate transparently and deliver measurable progress. We have set targets to reduce scope 1 and 2 emissions by 42% and scope 3 emissions by 25% by 2035. We are also aiming for a 10% reduction in water consumption and plan to achieve zero waste to landfill at 75% of our sites, or 34 locations, by 2035. These goals reflect our commitment to building a more resilient, sustainable enterprise and making meaningful contributions to a better world. I will now turn the call over to James for a comprehensive financial update.

James M. Till: Thank you, Curtis. Good morning, everyone. Turning to our financial results on Slide 11, after adjusting for the impacts of the winter storms in North America, we delivered performance that was in line with our expectations. Volumes and earnings came in as anticipated while we continued our trend of strong free cash flow generation, which we have demonstrated since the closing of the merger. Our teams have done an exceptional job of advancing synergy realization and making substantial progress on Project CORE, which resulted in adjusted EBITDA remaining essentially flat for the quarter as gains from internal initiatives were offset by external headwinds. During the quarter, we generated a robust $73 million of free cash flow, reflecting our focus on operational excellence, a disciplined capital expenditure approach, and working capital improvement initiatives.

Over the last twelve months, we generated $128 million of adjusted free cash flow, representing a free cash flow yield of over 40% relative to our quarter-end market capitalization. For the quarter, sales were $796 million, as solid performance across adult and infrastructure product categories was offset by weather-related disruptions in North America and continued broad-based market softness in Europe. Adjusted EBITDA for the quarter was $90 million, as contributions from synergies and Project CORE were offset by the headwinds from the winter storm shutdowns, as well as weaker demand in Europe and negative mix in South America. Turning to our segment performance, beginning with the Americas on Slide 12. Despite the winter storm impacts, we achieved volume growth in our adult and infrastructure categories and saw normalization toward the end of the quarter in South America as we lap the Asia import pressures discussed on prior calls.

Reported revenues reflected the contractual pass-through of lower raw material costs during the quarter, which pressured pricing but did not have a material effect on underlying profitability. Adjusted EBITDA in the Americas declined by $6 million compared to the prior year. Although winter storms pressured reported volumes, the most pronounced impact was on our conversion cost and product mix. As constrained capacity areas did not fully recover during the quarter, we do anticipate recovery of these areas in 2026. Turning now to the Rest of World Division on Slide 13. We experienced a year-over-year decline in revenues in the quarter, as strength in the European wipes business was more than offset by ongoing general softness in Europe and the pass-through of lower raw material costs.

Adjusted EBITDA for the Rest of World division increased by an impressive 19% to $32 million. The improvement reflects our progress on disciplined cost management and synergy realization, as the division’s performance illustrates the positive impacts of our focus on operational efficiency and portfolio optimization. Turning to capital allocation on Slide 14. Aligned with our capital allocation priorities, we repaid $36 million of outstanding debt during the quarter, bringing our debt repurchases for 2026 to $63 million. These actions reflect our continued focus on strengthening the balance sheet while maintaining a disciplined and balanced approach to capital deployment. We closed the quarter with approximately $600 million of available liquidity, providing a strong financial foundation to navigate ongoing inflationary pressures, fund strategic investments, and pursue attractive growth opportunities while preserving flexibility in an increasingly dynamic geopolitical environment.

From a guidance standpoint, after incorporating the March inflation, our target range remains unchanged. However, while we benefit from efficient pass-through mechanisms, we are operating in an environment of potentially unprecedented volatility, both in terms of the magnitude and timing of raw material inflation. As a result, we would expect some headwinds in the third quarter followed by recovery in quarter four. This concludes my financial review, and I will turn it back to Curtis.

Curtis L. Begle: Thank you, James. This quarter’s performance reflects the balance we have in our portfolio, our global scale, and our focus on improving our cost competitiveness. We have recovered from operational disruptions caused by the winter storms, worked closely with our customers to manage the negative impacts of the war in Iran, and maintained our long-term focus on business improvement. Our confidence in our business drove our debt repayment in the quarter. As we look ahead, there is uncertainty, but we remain steadfast in our commitment to delivering improved value for our stakeholders. Operator, please open the line for questions.

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Operator: Thank you. Please press 11. If your question has been answered and you would like to remove yourself from the queue, press 11 again. Our first question comes from Gabrial Shane Hajde with Wells Fargo. Your line is open.

Gabrial Shane Hajde: Curtis, James, good morning. I know it was one month in March that you faced some of these higher costs, and the raw material suppliers tried to push in some price increases pretty quickly. I suspect that you had some level of raw material that sits on the books, and then by the time it filters through the income statement, maybe that mitigates some of the impact in the immediate short term. But you talked about having a lag impact on the third quarter. Can you give us a sense, with five months left for the second half, how you are thinking about the cadence and what you alluded to at the end of your remarks there, James, on EBITDA progression?

Curtis L. Begle: I will cover the first part and then kick it over to James, Gabe. First, as we did see some of the inflationary measures coming through and anticipated them—historically, we have experienced some of these things, even if you go back to Katrina and Rita, where you had unprecedented lifts in a very short period of time—the most responsible and appropriate thing to do is to ensure continuity of supply for our customers. That is going to require whatever it takes to ensure that you are paying for the product to get it in. The immediate action and response from our commercial team I was extremely pleased with and proud of, getting with customers as soon as possible to start to address where we may have a quarterly price change versus monthly.

In many cases, as we have talked about before, we are very efficient in our pass-through mechanisms for those inflationary costs. But whenever it goes up to the levels that it has, it is going to require shortening that window, and these are abnormal times. In terms of the collaboration with customers, it has been very positive. Ensuring that we get them supplied is paramount across the globe, and, more importantly, staying in regular communication. One thing we did not highlight as much on the script that I want to address is there are other increases you experience outside of just the raw material pass-throughs—freight, logistics, energy, etc. In addition to moving with the monthly price index moves, we work with customers on identifying surcharge opportunities and ensuring continuity of supply for them.

James, I will let you cover how we are seeing the back half and the recovery.

James M. Till: Thanks, Gabe, for the question. As Curtis highlighted, from an earnings standpoint the teams jumped in quickly to mitigate those gaps. The current environment is pretty fluid. My remarks in terms of headwinds are more in terms of cash. From a cash standpoint, the teams are working with customers and with vendors to offset any pressure that we would see in Q3 and offset that through the remainder of the year as we finish out the back half.

Gabrial Shane Hajde: For posterity, you talked about reiterating the guidance—I think $3.8 to $4.1 of EBITDA and free cash of $90 to $110. Both of those elements are what you are talking about. And then, relatedly, cash flow generation was super strong in the first half—congratulations on that. Is there anything seasonally we should consider? There is not a lot of history to look to. It would seem to suggest, to your point, suppliers may give you a little bit of relief on the AP side, but with cost going up, it would consume cash. One of your prior parent companies gave a rule of thumb that for every penny it was roughly $7 million of cash consumption. Is there anything that you can help us with in that regard? Thank you.

James M. Till: Sure. I remember that well. Unfortunately, it is not quite as mechanical for us. The straight math is $2 million a penny, but that is before offsetting actions. Then you think about working with customers, working with vendors, working on inventory levels. I would be remiss if I did not highlight that it is very fluid in terms of where we will be by the end of the year in terms of this inflation—it has even changed a lot in the last 24 hours. You are absolutely right that we had a very strong first half of the year. Q3 generally is a softer cash generation quarter for us due to timing of some payments and things like that. I am really proud of where the team started; it gave us a good head start as we get into the back half. There is a lot of uncertainty in terms of where it all plays out, but the teams are working diligently to offset the pressures that we see on cash, and on earnings we were very quick to try to address those gaps.

Gabrial Shane Hajde: Last one for me. Order patterns or anything that you have observed, 60-some days into the conflict, that you would share with us? Orders—anything like that that is flagging?

Curtis L. Begle: That is a good callout, Gabe. If you recall last year at this time, we had concerns related to order bookings with the announcement of the tariffs and some of the behaviors that we started to see from customers. In this case, as we headed into Q3, bookings are very normal for us. If anything, we are still fulfilling orders that were impacted by the storms in February, so there is still some catch-up there. There are customers that get low on inventories in a couple of areas, so we have looked to support them. From a year ago to now, I would say we feel good about where our bookings are. I do not want to declare victory or have a one-month trend declare what the next two months might look like, but coming out of March into April, we feel good about where the volume sits and the demand outlooks are.

We are staying close to customers, both existing and potentially new customers, as they are identifying challenges within their own supply streams. We are being very responsible and looking to make sure that whatever we pick up from a customer order standpoint is above our expectations from a profit margin standpoint.

Operator: Thank you. Our next question comes from Kevin William McCarthy with Vertical Research Partners. Your line is open.

Kevin William McCarthy: Curtis, I think I heard you reference a shift to a monthly pricing paradigm. Would you elaborate on that in terms of the reception among your customers, what constraints, if any, you may have given existing contracts, and how we should think about lag effects as you shift to this new pricing strategy?

Curtis L. Begle: Thanks, Kevin, and good to hear your voice. Historically, as we have communicated, we are very efficient in terms of the pass-through mechanisms in a normal environment. If polyolefins go up or down 3% to 6% in a quarter, it typically does not have a material impact, positively or negatively, on our financials. In this case, these are abnormal times. Contracts are meant to be established for normal environments. We acted quickly. Our customers told us we were the first ones to come to them with this, and that is what we would expect as the largest player. The entire market understands the negative impact this can have on businesses in our space. I am really proud of what the team has done in terms of collaborative discussions with customers—ensuring supply so they can run their lines and provide products on the shelf is of the utmost importance.

As expected, after tense early negotiations, our customers as a whole have been very supportive. We are shifting in the near term from quarterly to monthly with some customers, understanding that will persist until things settle down. Then we would go back to our normal pass-through mechanisms.

Kevin William McCarthy: Understood. I want to follow up on your comments regarding winter storms Fern and Hernando. What was the EBITDA impact on Magnera Corp.’s fiscal second quarter from those storms? Do you expect to recover the majority of it or all of it in the back half, and what is the cadence of that?

Curtis L. Begle: If you recall during the earnings call in February, we highlighted $4 million to $6 million of pressure because of those shutdowns, and it came in at about $5 million total for the quarter. It is a matter of us catching up with those orders and getting the lines to run efficiently, and our expectation is to recover that through the balance of the year.

Kevin William McCarthy: Last one for me, James, just to follow up on your reiteration of the free cash flow range. Can you provide an update on some of the moving parts? I would have thought that working capital today would require a larger use of cash than we might have thought pre-war. What are you doing to try to offset that and maintain the range?

James M. Till: We were roughly $10 million positive through the first half, thanks to really good work by the team and all the efforts that delivered a strong quarter as well as first half and enabled us to pay down debt. As we think about the inflationary pressure we are going to have on working capital from a cash standpoint, the outlook is very fluid. The teams are doing a nice job of working with customers in terms of shortening terms—which they understand as we are having the conversations on shortening the lag as well. We are talking with our vendors in terms of temporary terms, as well as looking at our inventory levels. All the things we would normally do, but in this situation, everything gets heightened even more to offset those pressures.

Operator: Thank you. Our next question comes from Roger Spitz with Bank of America. Your line is open.

Roger Spitz: Hi, thanks very much. I think at one point you gave a split of your sales by the amount subject to contract with pass-through mechanisms, which we have been talking about going from quarterly to monthly resets; secondly, subject to general price change announcements; and third, spot sales. Do you have an update on that?

Curtis L. Begle: Thanks, Roger. We have done a really good job—and we talked about it last year—as we started to put in new contracts, particularly around some of the legacy Glatfelter customers, which is a good portion of the fiber-based business. We were roughly 70% a year ago; that is closer to roughly 85% on any contract customers. If you think about the mix across the organization, I would say about 20% of the total portfolio is subject to general price increase mechanisms or spot business. Product lines like Typar, for instance, typically have annual adjustments, and we have recently gone out with an increase in that infrastructure space.

Roger Spitz: Great. That is it for me. Thank you.

Curtis L. Begle: Thanks, Roger.

Operator: Thank you. Our next question comes from Edward Brucker with Barclays. Your line is open.

Edward Brucker: Thanks for taking the question. Just to add on to that, the business that is not on contract pass-throughs—how does pricing work there? Is it through negotiated pricing or price increases? And secondly, the contract pass-throughs—are those just for raw materials, and then you have to do surcharges on top of that to offset freight, energy, and logistics?

Curtis L. Begle: Yes, correct. To answer your second question first, historically and strategically our input raw material costs make up the majority of our cost of goods sold, and those are on indexes and baked into the contracts. In times like this—when it escalates so quickly—those are the discussions we have with customers to ensure we can keep them in supply. For other inflationary costs, we typically have openers in the contract language to have those discussions with customers, show them the benchmarks and the changes, and then put those through as a temporary or somewhat longer-term surcharge to recover some of those costs. If escalation continues, we have to address it with additional surcharges. At this point, we have worked really closely with customers on roughly 80% to 85% of our total portfolio.

The other portion is balanced out by some of our branded business that we sell in the market, like our Typar brand in the building construction market and our Centerra and Chicopee wipes businesses. Those are price pass-throughs and updates throughout the year where needed and appropriate. Less than 10% of our business I would consider spot, and that is negotiated typically quarter to quarter or order to order, much like bidding on a campaign for a particular quarter if we have some line time that makes sense to go out and get some spot business.

Edward Brucker: That is helpful. And on capital allocation, you have done an impressive job reducing debt the past two quarters. Do you expect to continue to chip away at debt? Maybe if you have a debt reduction goal, that would be helpful. And how have you been taking that debt out—has it been through open market purchases?

James M. Till: Our capital allocation approach has been to delever and pay down debt, and we do that efficiently with our cash, including in the open market, as you would expect. That has been the case for the entirety of this current year. We gave a target at the beginning of the year of roughly a 100 of debt paydown this year based off our guided free cash flow range, and that has not changed.

Edward Brucker: Got it. Thanks.

Operator: Thank you. Our next question is a follow-up from Kevin William McCarthy with Vertical Research Partners. Your line is open.

Kevin William McCarthy: Yes, thank you and good morning. Question for you on your sequential margin progression. As we think about this wave of cost inflation, particularly on resins, being unprecedented—if you were to recover that cost inflation dollar for dollar, maybe your top line would inflate rapidly and you would be EBITDA neutral because you recovered one for one. But one consequence is your percentage margin would decline sequentially. Is that the right way to think about it as you move from March into June? I think you are a FIFO accounting company—maybe that helps a bit. Can you talk through the moving parts and what we should expect in terms of your sequential margin trajectory?

Curtis L. Begle: You are spot on. As you think about the pass-through mechanisms, it will increase the top line, which is why we cover both top line and volume—overall organic volume growth—in a particular quarter. You would anticipate stable and expected EBITDA dollars on a higher sales dollar number, which in essence would reduce your EBITDA percentage by some basis points. In general, for us, it is really focused on earnings, free cash flow generation, and—even in a deflationary environment—you may see your top line drop while bottom-line margin improves. We focus on the physical volume we sell and the EBITDA dollars that come along with that.

Kevin William McCarthy: And just to follow up on the customer order patterns—are your customers, in any cases, trying to get ahead of what is likely to be meaningful inflation, or are they not doing that? If they are, how do you approach that? Do you try to control the pace of orders in some fashion? What are you seeing and hearing?

Curtis L. Begle: We did not experience swings as much as we have historically. In some cases, there is only so much we can make in a given quarter, month, or week. As we take those orders, we ensure we keep customers in supply, understand where their inventory positions may be, and we may have certain inventory levels we keep as safety stock for them. We have not seen anything particularly abnormal. They typically operate on lower inventories and have limited warehouse space. We are FIFO, with roughly 60-day turns as a whole, and certain product lines at about 14 days. We are still catching up with some of the orders that were impacted by the February storms, and that is what we expect throughout the balance of the year.

Kevin William McCarthy: Perfect. Thank you again.

James M. Till: Sure.

Operator: Thank you. There are no further questions at this time. I would like to turn the call back over to Curtis L. Begle for closing remarks.

Curtis L. Begle: Thank you, Operator, and thank you again for joining us today and for your interest in Magnera Corp. We look forward to updating you on our progress in our next quarter and seeing many of you at the conferences scheduled in June. Have a great day, everybody.

Operator: Thank you for your participation. You may now disconnect.

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