Magnera (NYSE:MAGN) executives said the company’s first-quarter fiscal 2026 performance was in line with internal expectations, supported by cost actions, portfolio mix improvements, and ongoing progress under its synergy program and “Project Core” transformation initiative.
Management reiterated 2026 outlook and pointed to resilient demand for essentials
Chief Executive Officer Curt Begle said Magnera delivered a sequential earnings improvement versus the fourth quarter that aligned with expectations and “reinforces our 2026 Adjusted EBITDA guidance of 9% growth,” with synergy realization and Project Core “tracking as planned.” Begle also said that despite inflation-related consumer spending concerns, customers are indicating resiliency and continued demand for the company’s “essential products.”
Q1 results: sales of $792 million; adjusted EBITDA of $93 million
Chief Financial Officer Jim Till said first-quarter sales were $792 million, with strength across consumer solutions categories offset by weaker performance in Latin America and “continued broad-based market softness in Europe.”
Adjusted EBITDA totaled $93 million, which Till said was flat year-over-year on a constant-currency basis, as benefits from synergies and cost reductions offset softer demand in Europe and South America. He added that the company made “substantial progress” on Project Core during the quarter, positioning Magnera to realize earnings benefits as it optimizes its global footprint and aligns its cost structure with long-term demand trends.
Segment commentary: Americas pressured by South America; Rest of World earnings up 9%
In the Americas segment, Till said Magnera posted 2% organic volume growth, driven by demand in wipes and adult end markets. However, adjusted EBITDA in the Americas declined by $3 million year-over-year, “largely attributed to volume and product mix pressures in South America.” Till also noted reported revenues were affected by the contractual pass-through of lower raw material costs, which reduced revenue but did not materially impact profitability.
Management said it is executing targeted initiatives under Project Core to enhance efficiency and optimize the regional footprint, and it expects these efforts—along with ongoing synergy realization and operational excellence—to support margin recovery in the coming quarters.
In the Rest of World segment, Till said revenue declined year-over-year as strength in Asia healthcare was more than offset by European market softness and the pass-through of lower raw material costs. Even so, adjusted EBITDA for Rest of World increased 9% to $35 million, reflecting cost management, synergy realization, and a focus on differentiated products in end markets with attractive profitability.
Innovation focus: PFAS-free healthcare barrier protection and battery materials progress
Begle outlined innovation efforts intended to improve portfolio mix in 2026 and beyond. He described two categories of innovation: “transformational” programs that take longer to realize full potential but address key end-market needs, and incremental improvements or expansions of existing innovations to new markets.
- Healthcare barrier protection: Begle said the company launched a “transformational breakthrough” delivering fluid repellency for healthcare professionals while “ending the need for PFAS chemicals.” He added it addresses end-of-life material concerns while maintaining mission-critical performance.
- Battery materials: Begle said Magnera has progressed on an advanced material solution intended to extend battery life and accelerate charging times. He said the product is a candidate for a government grant supporting regional supply chain priorities tied to national security programs.
- Kamisoft platform: Begle described Kamisoft as a step improvement in softness while maintaining barrier and tensile strength. He said the product launched in North America and is being expanded to other regions, with $15 million in sales last year and “mid-single digit” growth heading into 2026.
On pricing and margin implications, Begle said the company expects innovative offerings to carry higher margins than its average, stating that innovation should be “well above our average of 11%,” with ranges depending on application, materials, and customer collaboration.
Begle also cited first-quarter market wins, including premium hard surface disinfecting wipes amid an elevated flu season, growth in European infrastructure tied to essential utility investments and maintenance projects, and gains in branded Gekko Tape for high-voltage cable applications and wind and solar energy expansions.
Cash flow, liquidity, and deleveraging priorities
Till said free cash flow over the last four quarters totaled $97 million, representing a free cash flow yield of approximately 18% based on market capitalization at quarter-end. Magnera ended the quarter with approximately $550 million of available liquidity.
Near term, Till said capital allocation priorities are centered on strengthening the balance sheet and deleveraging toward a target leverage ratio of 3x. The company repaid $27 million of debt during the quarter and expects to repay approximately $100 million over the fiscal year. In response to a question on the approach, management said it may buy back bonds and/or term loans in the open market, targeting the best return at the time.
On free cash flow components, Till said the company targets flat working capital and referenced a free cash flow walk that included the midpoint, $135 million for interest, $80 million for integration costs, and $80 million of CapEx to reach roughly $100 million at the midpoint.
In Q&A, management said anti-dumping proposals in Brazil could reach conclusion around May and described a mix shift in South America, including increasing adult incontinence adoption rates aided in part by government subsidies. Begle also addressed winter storm impacts, saying North American facilities were affected primarily through employee call-offs and estimating an impact to roughly 10% of North America shipping days, with expected catch-up over subsequent quarters. On volumes, management reiterated an assumption of “flattish” overall volumes for fiscal 2026 and said the primary drivers of EBITDA growth are synergy realization and Project Core initiatives.
About Magnera (NYSE:MAGN)
Magnera’s purpose is to better the world with new possibilities made real. By continuously co-creating and innovating with our partners, we develop original material solutions that make a brighter future possible. With a breadth of technologies and a passion for what we create, Magnera’s solutions propel our customers’ goals forward and solve end-users’ problems, every day.
