UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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| | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended December 27,
or
| | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
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(Address of principal executive offices)
(866 ) 744-7380
(Registrant's telephone number, including area code)
| Commission file number | Exact name of registrant as specified in its charter | IRS Employer Identification No. | State or other jurisdiction of incorporation or organization | |||
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at the past 90 days. Yes ☒ No ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | | ☒ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | |
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | ||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒ .
Common Stock outstanding on February 5, 2026 totaled 35.9 million shares.
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This document contains certain statements that
are “forward-looking” statements within the meaning of the federal securities
laws and are presented pursuant to the safe harbor provisions of the U.S.
Private Securities Litigation Reform Act of 1995. Such “forward-looking”
statements include, but are not limited to, statements with respect to our
future financial performance and condition, results of operations and business,
our expectations or beliefs concerning future events, plans, objectives, expectations
and intentions, and other statements that are not historical facts. These
statements may contain words such as “believes,” “expects,” “may,” “will,”
“should,” “would,” “could,” “seeks,” “approximately,” “intends,” “plans,”
“estimates,” “projects,” “outlook,” “guidance,” “anticipates” or “looking
forward” or similar expressions. In addition, we, through our senior
management, from time to time make forward-looking public statements concerning
our expected future operations and performance and other developments. These
forward-looking statements are based upon the current beliefs and expectations
of the management of Magnera and are subject to risks and uncertainties that
may change at any time. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
in the forward-looking statements. Although it is not possible to identify all
of these risks and uncertainties, they include, among others, the following:
global economic conditions; inflation; the cost and availability of raw
materials and energy; disruption of our supply chain; the adverse impact of
weather events on our facilities, inventory and suppliers, as well as adverse
effects on our customers, suppliers and other business partners; the effect of
competition on our business; our inability to integrate future acquired
companies or to realized expected operating synergies; synergies expected to be
achieved in connection with our business combination with a subsidiary of Berry
Global Group, Inc.; our inability to retain our officers and employees or the
occurrence of labor disputes; disruption of our information technology systems,
including as a result of a cyber breach; risks associated with operating
internationally, including fluctuating exchange rates, tariffs, differing tax
laws and regulation; litigation and regulatory investigations; and disputes
related to intellectual property used in our business. Additional information regarding these risks
and uncertainties and other risks applicable to our business are described in
additional detail in our reports filed with the Securities and Exchange
Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal
year ended September 27, 2025, and other filings that we make with the SEC.
These risk factors may not contain all of the material factors that are
important to you. New factors may emerge from time to time, and it is not
possible to either predict new factors or assess the potential effect of any
such new factors. Accordingly, readers should not place undue reliance on those
statements. All forward-looking statements are made as of the date hereof, and
we undertake no obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or otherwise, except as
otherwise required by law.
2
Magnera Corporation
Form 10-Q Index
For the Quarterly Period Ended December 27, 2025
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Item 1
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Item 1A
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3
Consolidated and Combined Statements of Operations
(Unaudited)
| Quarterly Period Ended | ||||||||
| (in millions of dollars, except per share amounts) | December 27, 2025 | December 28, 2024 | ||||||
| Net sales | $ | $ | ||||||
| Costs and expenses: | ||||||||
| Cost of goods sold | ||||||||
| Selling, general and administrative | ||||||||
| Amortization of intangibles | ||||||||
| Restructuring and other activities | ||||||||
| Operating income (loss) | ( | ) | ||||||
| Other expense, net | ||||||||
| Interest expense, net | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax expense (benefit) | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per share: Basic and diluted | $ | ( | ) | $ | ( | ) | ||
Consolidated and Combined Statements of Comprehensive Loss
(Unaudited)
| Quarterly Period Ended | ||||||||
| (in millions of dollars) | December 27, 2025 | December 28, 2024 | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive income, net of tax: | ||||||||
| Currency translation gain (loss) | ( | ) | ||||||
| Other comprehensive income (loss) | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
See notes to Consolidated and Combined Financial Statements.
4
Magnera Corporation
Consolidated Balance Sheets
| (in millions of dollars) | December 27, 2025 | September 27, 2025 | ||||||
| Assets | (Unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Finished goods | ||||||||
| Raw materials | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Noncurrent assets: | ||||||||
| Property, plant and equipment | ||||||||
| Goodwill and intangible assets | ||||||||
| Right-of-use assets | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued employee costs | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Noncurrent liabilities: | ||||||||
| Long-term debt | ||||||||
| Deferred income taxes | ||||||||
| Operating lease liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Equity: | ||||||||
| Common stock ( | ||||||||
| Additional paid-in capital | ||||||||
| Retained loss | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ |
See notes to Consolidated and Combined Financial Statements.
5
Condensed Consolidated and Combined Statements of Cash Flows
(Unaudited)
| Quarterly Period Ended | ||||||||
| (in millions of dollars) | December 27, 2025 | December 28, 2024 | ||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net cash from operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of intangibles | ||||||||
| Non-cash interest expense | ||||||||
| Deferred income tax | ||||||||
| Share-based compensation expense | ||||||||
| Other non-cash operating activities, net | ||||||||
| Changes in working capital, net | ( | ) | ( | ) | ||||
| Changes in other assets and liabilities | ( | ) | ||||||
| Net cash from (used in) operating activities | ( | ) | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Additions to property, plant and equipment | ( | ) | ( | ) | ||||
| Cash acquired from merger | ||||||||
| Net cash from (used in) investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from long-term borrowings | ||||||||
| Repayments on long-term borrowings | ( | ) | ( | ) | ||||
| Transfers from (to) parent, net | ||||||||
| Cash distributions to parent | ( | ) | ||||||
| Debt fees and other, net | ( | ) | ||||||
| Net cash from (used in) financing activities | ( | ) | ||||||
| Effect of currency translation on cash | ( | ) | ( | ) | ||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at the end of period | $ | $ | ||||||
See notes to Consolidated and Combined Financial Statements.
6
Magnera Corporation
(Unaudited)
| Accumulated Other | ||||||||||||||||||||||||
| Common | Berry Net | Additional | Comprehensive Loss - | Retained | Total | |||||||||||||||||||
| (in millions of dollars) | Stock | Investment | Paid-in Capital | Currency Translation | Loss | Equity | ||||||||||||||||||
| Balance at September 27, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||
| Balance at December 27, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
| Balance at September 28, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||
| Cash distribution to parent | ( | ) | ( | ) | ||||||||||||||||||||
| Transfers from parent, net | ||||||||||||||||||||||||
| Distribution of parent’s net investment | ( | ) | ||||||||||||||||||||||
| Acquisition | ||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||
| Balance at December 28, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
See notes to Consolidated and Combined Financial Statements.
7
Notes to Consolidated and Combined Financial Statements
(Unaudited)
(tables in millions of dollars, except per share data)
1. Basis of Presentation
On November 4, 2024 (the
“Closing Date”), Treasure Holdco, Inc., which was a wholly owned subsidiary of
Berry Global Group, Inc. (“Berry”), completed its merger (the “merger”) with
the Glatfelter Corporation which concurrently changed its name to Magnera
Corporation.
The Consolidated and Combined
Financial Statements contain combined financial statements for the fiscal
periods prior to the Closing Date of the merger and were prepared on a
stand-alone basis. The pre-merger Combined Financial Statements of Operations,
Comprehensive Income (Loss), Cash Flows and Changes in Equity have been
prepared on a carve-out basis, which include assumptions underlying the
preparation that management believe are reasonable. However, the combined
pre-merger financial information included herein may not necessarily reflect
the Company’s results of operations, comprehensive income (loss), cash flows
and changes in equity had the Company been an independent stand-alone company
during the periods presented.
The accompanying unaudited
Consolidated and Combined Financial Statements of Magnera have been
prepared in accordance with accounting principles generally accepted in the
United States (“GAAP”) pursuant to the rules and regulations of the Securities
and Exchange Commission (the "SEC") for interim reporting. In
preparing financial statements in conformity with GAAP, we must make estimates
and assumptions that affect the reported amounts and disclosures at the date of
the financial statements and during the reporting period. Actual results could
differ from those estimates. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included, and all subsequent events up to the time of
the filing have been evaluated. For further information, refer to the Company’s
Form 10-K filed with the SEC on November 25, 2025.
Recently Issued
Accounting Pronouncements
In 2023, the Financial Accounting Standards Board ("FASB") issued
guidance with the goal of providing more information in the income tax
reconciliation table and regarding income taxes paid. This Accounting Standard
Update ("ASU") is effective for fiscal years beginning after December
15, 2024, may be applied prospectively or retrospectively, and allows for early
adoption. The Company is currently evaluating the impact of adopting this
guidance.
In 2024, the FASB issued
guidance with the goal of providing more expense information for certain
categories of expenses that are included in line items on the face of the
statements of operations. This ASU is effective for fiscal years beginning
after December 15, 2026 and for interim periods beginning after December 15,
2027, and may be adopted on a prospective or retrospective basis and allows for
early adoption. The Company is currently evaluating the impact of adopting this
guidance.
2. Revenue and Accounts Receivable
The Company records current expected credit losses based on a variety of factors including historical loss experience and current customer financial condition. The reserve as of each
period end and changes to our current expected credit losses, write-off
activity, and recoveries were not material for any of the periods presented.
The Company participates in
customer supply chain financing programs to collect certain receivables through
third-party financial institutions. These arrangements qualify as true sales,
as the receivables are transferred without recourse. As a result, the balances
are removed from trade receivables on the balance sheet, and the cash proceeds
are reported as operating cash flows.
8
3. Restructuring and Other Activities
During fiscal year 2025, the Company
announced cost savings initiatives including plant rationalizations in all
segments as part of the Project CORE restructuring plan. The project is
expected to be carried out over the next two fiscal years , with the operations
savings intended to counter general economic softness.
The table below sets forth the significant components of the Restructuring and other activities, including supply chain financings activity charges recognized for the periods presented, by reportable segment:
| Quarterly Period Ended | ||||||||
| December 27, 2025 | December 28, 2024 | |||||||
| Americas | $ | $ | ||||||
| Rest of World | ||||||||
| Consolidated | $ | $ | ||||||
The table below sets forth the activity with respect to the Restructuring and other activities accrual at December 27, 2025:
| Restructuring | ||||||||||||||||||||
| Employee Severance | Facility Exit | Non-Cash | Integration | |||||||||||||||||
| and Benefits | Costs | Charges | and Other | Total | ||||||||||||||||
| Balance at September 27, 2025 | $ | $ | $ | $ | $ | |||||||||||||||
| Charges | ||||||||||||||||||||
| Non-cash items | ( | ) | ( | ) | ||||||||||||||||
| Cash payments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Balance at December 27, 2025 | $ | $ | $ | $ | $ | |||||||||||||||
4. Leases
The Company leases certain manufacturing facilities, warehouses, office space, manufacturing equipment, office equipment, and automobiles.
Supplemental lease information is as follows:
| Leases | Classification | December 27, 2025 | September 27, 2025 | ||||||
| Operating leases: | |||||||||
| Operating lease right-of-use assets | Right-of-use asset | $ | $ | ||||||
| Current operating lease liabilities | |||||||||
| Noncurrent operating lease liabilities | Operating lease liabilities |
9
5. Long-Term Debt
Long-term debt consists of the following:
| Facility | Maturity Date | December 27, 2025 | September 27, 2025 | |||||||
| Term loan | $ | $ | ||||||||
| Revolving credit facility | ||||||||||
| Debt discounts, deferred fees and other | ( | ) | ( | ) | ||||||
| Total long-term debt | $ | $ |
Despite not having financial maintenance covenants on our Term Loan and secured notes, these agreements do contain certain negative covenants. The failure to comply with these negative covenants could restrict our ability to incur additional indebtedness, effect acquisitions, enter into certain significant business combinations, make distributions or redeem indebtedness. We are in compliance with all covenants as of December 27, 2025.
6. Financial Instruments and Fair Value Measurements
In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors. The Company may use derivative financial instruments to help manage market risk and reduce the exposure to fluctuations in foreign currencies and interest rates. These financial instruments are not used for trading or other speculative purposes.
Cross-Currency Swaps
The Company is party to certain cross-currency swaps to hedge a portion of our foreign currency risk. The
swap agreements mature November 2027 (€250 million) and November 2029 (€425 million). The swaps are
designated as a hedge of the Company’s foreign currency investment in foreign
subsidiaries. The activity on net investment hedges, net of tax, recorded in Accumulated other comprehensive loss for the quarter ended December 27, 2025 and December 28, 2024 was $(2 ) million and $8 million respectively. When valuing cross-currency swaps, the Company utilizes Level 2 inputs (substantially observable).
The Company records the fair value positions of all derivative financial instruments on a net basis by counterparty for which a master netting arrangement is utilized. Balances on a gross basis are as follows:
| Derivative Instruments | Hedge Designation | Balance Sheet Location | December 27, 2025 | September 27, 2025 | ||||||||
| Cross-currency swaps | Designated | Other long-term liabilities | $ | ( | ) | $ | ( | ) |
The effect of the Company’s derivative financial instruments on the Consolidated and Combined Statements of Operations is as follows:
| Quarterly Period Ended | ||||||||||
| Derivative Instruments | Statements of Operations Location | December 27, 2025 | December 28, 2024 | |||||||
| Cross-currency swaps | $ | $ | ||||||||
Non-recurring Fair Value Measurements
The Company has certain assets that are measured at fair value on a non-recurring basis when impairment indicators are present or when the Company completes an acquisition. The Company adjusts certain long-lived assets to fair value only when the carrying values exceed the fair values. The categorization of the framework used to value the assets is considered Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value. These assets that are subject to our impairment analysis primarily include our definite lived and indefinite lived intangible assets, including Goodwill and our Property, plant and equipment. The Company reviews Goodwill and other indefinite lived assets for impairment as of the first day of the fourth fiscal quarter each year and more frequently if impairment indicators exist. No impairment indicators were identified in the current quarter, but future
declines in our expected operating performance or sustained periods of lower
valuation market multiples could result in impairment charges in the future.
The Company’s financial instruments consist primarily of cash and cash equivalents, long-term debt, and cross-currency swap agreements. The book value of our marketable long-term indebtedness exceeded fair value by $56 million as of December 27, 2025. The Company’s long-term debt fair values were determined using Level 2 inputs (substantially observable).
10
7. Income Taxes
The year-to-date effective income
tax rate was unfavorably impacted by the jurisdictional mix of pre-tax results
among the Company and its subsidiaries and losses, which generate no tax
benefit in domestic and certain foreign jurisdictions. Foreign income taxed
in the U.S., as well as certain changes in applicable withholding taxes, also unfavorably influenced the effective tax rate.
8. Segment and Geographic Data
The Company’s operations are organized into two
Selected information by reportable segment is presented in the following tables:
| Quarterly Period Ended | ||||||||
| December 27, 2025 | December 28, 2024 | |||||||
| Net Sales | ||||||||
| Americas | $ | $ | ||||||
| Rest of World | ||||||||
| Total net sales | $ | $ | ||||||
| Segment operating expenses(4) | ||||||||
| Americas | $ | $ | ||||||
| Rest of World | ||||||||
| Total segment operating expenses | $ | $ | ||||||
| Adjusted EBITDA | ||||||||
| Americas | $ | $ | ||||||
| Rest of World | ||||||||
| Total adjusted EBITDA | $ | $ | ||||||
| Reconciling items: | ||||||||
| Depreciation and amortization | $ | $ | ||||||
| Restructuring, transaction, business optimization and other activities | ||||||||
| Argentina hyperinflation(1) | ||||||||
| Corporate expense allocation(2) | ||||||||
| Other non-cash charges(3) | ||||||||
| Operating income (loss) | ( | ) | ||||||
| Interest expense, net and other expense (income), net | ||||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | ||
(1)
Impact of hyperinflation
includes the adverse impact of highly inflationary accounting for subsidiaries
in Argentina where the functional currency was the Argentine Peso
(2)
Consists of estimated
parent-allocated charges for the prior year merger which is required by
GAAP as part of the carve-out financial statement process
(3)
Includes stock compensation
expense and other non-cash items, including $3 million of Restructuring and other expenses and $12 million of inventory step-up
charges related to the prior year merger in the quarter ended December 27, 2025 and December 28, 2024, respectively
(4)
Segment operating expenses
include primarily cost of goods sold and selling, general and administrative
expenses
11
| Depreciation and amortization | ||||||||
| Americas | $ | $ | ||||||
| Rest of World | ||||||||
| Total depreciation and amortization | $ | $ |
Total assets and capital expenditures by segment are not disclosed as the CODM does not utilize these measures to evaluate segment performance or
allocate resources and capital.
Selected information by geographical region is presented in the following table:
| Quarterly Period Ended | ||||||||
| December 27, 2025 | December 28, 2024 | |||||||
| Net sales | ||||||||
| United States and Canada | $ | $ | ||||||
| Latin America | ||||||||
| Rest of World | ||||||||
| Total net sales | $ | $ | ||||||
Selected information by product line is presented in the following table:
| Quarterly Period Ended | ||||||||
| (in percentages) | December 27, 2025 | December 28, 2024 | ||||||
| Net sales | ||||||||
| Personal Care | % | % | ||||||
| Consumer Solutions | % | % | ||||||
| Total net sales | % | % | ||||||
9. Contingencies and Commitments
Litigation
The Company is
party to various legal proceedings involving routine claims which are
incidental to its business. Although the Company’s legal and
financial liability with respect to such proceedings cannot be estimated with
certainty, the Company believes that any ultimate liability would not be
material to its Consolidated Balance Sheet, Consolidated and Combined Statements of
Operations, or Cash Flows.
Environmental Claims
Over the next 29 years, we are primarily responsible for the reimbursement of government
oversight costs associated with certain environmental claims regarding the Fox
River located in Wisconsin. At December 27, 2025, the outstanding balance of
the environmental liability and corresponding escrow asset was $17 million
and $9 million, respectively.
Tax Claims
As part of a previous
acquisition, the Company acquired a liability related to certain tax claims.
Depending on the resolution of the tax claim, the settlement will range between $40 million and $58 million as of December 27, 2025 with an
eventual payment to the Brazilian government and/or the selling stockholders of
the previous acquisition. The Company has recorded an estimated tax
liability on the Consolidated Balance Sheets in Other long-term
liabilities as the settlement of existing and potential claims is expected to
be greater than one year.
12
10. Basic and Diluted Net Loss Per Share
Basic net income or earnings per share ("EPS") is calculated by dividing the net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents.
The following tables provide a reconciliation of the numerator and denominator of the basic and diluted EPS calculations:
| Quarterly Period Ended | |||||||
| (in millions) | December 27, 2025 | December 28, 2024 | |||||
| Numerator | |||||||
| Consolidated net loss | $ | ( | ) | $ | ( | ) | |
| Denominator | |||||||
| Weighted average common shares outstanding - basic and dilutive | |||||||
| Net loss per share: | |||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | |
Shares excluded from the current period calculation, as the effect of their conversion into shares of our common stock would be antidilutive were 3.6 million.
13
Executive Summary
Business. The Company’s operations are organized into two
operating and reportable segments: Americas and Rest of World. The structure is
designed to align us with our customers, provide improved service, enable
future growth initiatives and efficiency of decision making to facilitate
synergy realization. The Americas segment consists of sites in North America and South America that manufacture a wide range of products and components of personal care and consumer solution products and components of products including medical garments, wipes, dryer sheets, filtration, baby diapers and adult incontinence. The Rest of World segment consists of sites throughout Europe and China that manufacture a broad collection of personal care and consumer solution products and components of products including tea bags, coffee filters, wipes, cable wrap, filtration, baby diapers and adult incontinence.
Raw Material Trends. Our primary raw materials are polymer resin,
wood-based fibers, and pulps. In addition, we use other materials in
various manufacturing processes. While temporary industry-wide shortages
of raw materials have occurred, we have historically been able to manage the
supply chain disruption by working closely with our suppliers and
customers. Changes in the price of raw materials are generally
passed on to customers through contractual price mechanisms over time, during
contract renewals, and by other means.
Outlook. The Company is affected by
general economic and industrial growth, raw material availability, cost
inflation, supply chain disruptions, new and changing tariffs and general
industrial production. Our business has both geographic and end market
diversity, which reduces the effect of any one of these factors on our overall
performance. Our results are affected by our ability to pass through raw
material and other cost changes, including tariffs, to our customers, improve
manufacturing productivity and adapt to volume changes of our
customers. Despite global
macro-economic challenges and uncertainties attributed to inflation, changing
tariff policies and general market softness, we continue to believe our
underlying long-term demand fundamental in all segments will remain strong as
we focus on providing advantaged products in targeted markets. For fiscal year
2026 ("fiscal 2026"), we project cash from operations between $170 to
$190 million and free cash flow between $90 to $110 million. Projected fiscal
2026 free cash flow assumes $80 million of capital spending.
Acquisition Strategy
As part of our growth strategy, we intend to pursue additional acquisition targets. Our acquisition strategy is focused on identifying attractive assets that will support improving our long-term financial performance, enhancing our market positions, and expanding our existing and complementary product lines. We seek to obtain businesses for attractive post-synergy multiples, creating value for our stockholders from synergy realization, leveraging the acquired products across our customer base, creating new platforms for future growth, and assuming best practices from the businesses we acquire. While the expected benefits to earnings will be estimated at the commencement of each transaction, once the execution of the plan and integration occur, we may be unable to accurately estimate or track what the ultimate effects will be due to system integrations and movements of activities to multiple facilities.
Non-GAAP
Measures
We use certain non-GAAP
financial measures in our disclosures. Adjusted EBITDA is the primary measure
of profit (loss) used by the CODM, our Chief
Executive Officer, to evaluate performance and allocate resources among our
reportable segments. Adjusted EBITDA is a non-GAAP financial measure and may be
calculated differently by other companies, including those in our industry or
peer group, which may limit its usefulness for comparative purposes. Adjusted
EBITDA should not be considered an alternative to any financial measure
determined in accordance with GAAP. See Note 8 to the Consolidated and Combined Financial
Statements for the definition of, and additional information regarding,
Adjusted EBITDA.
We also use free cash flow
metrics as a supplemental measure of liquidity, as they assist us in assessing
our ability to fund growth through cash generation. Free cash flow metrics are
non-GAAP financial measures and may be calculated differently by other
companies, including those in our industry or peer group, which may limit their
usefulness for comparative purposes. Free cash flow metrics should not be
considered an alternative to any financial measure determined in accordance
with GAAP.
14
Results of Operations
Comparison of the Quarterly Period Ended December 27, 2025 (the “Quarter”) and the Quarterly Period Ended December 28, 2024 (the “Prior Quarter”)
Business integration expenses consist of restructuring and impairment charges, acquisition/merger related costs, and other business optimization costs. Tables present dollars in millions.
Consolidated Overview
| Quarter | Prior Quarter | $ Change | % Change | ||||||||||||
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Net sales
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$ | 792 | $ | 702 | $ | 90 | 13 | % | |||||||
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Operating income (loss)
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14 | (22) | 36 | 164 | % |
Net sales: The net sales increase included revenue from the prior year merger of $112 million and favorable foreign currency changes of $36
million that were partially offset by a $52 million decrease in selling prices
primarily due to the pass-through of lower raw material costs and a 1%
organic volume decline which was attributed to strength in our consumer
solutions product categories being more than offset by competitive pressures in
South America and general market softness in Europe.
Operating income (loss): The operating income increase included a $10 million favorable impact from decreased business integration costs, a $12 million non-recurring inventory fair value step-up charge in the prior quarter, lower depreciation and amortization expenses of $8 million and operating income from the prior year merger.
Other expense,
net: The decrease in other
expense is primarily due to a $15 million prepayment penalty charge for
retiring debt in the prior year in connection with the prior year merger.
Interest expense, net: The interest expense, net increase is primarily attributed to incurred debt connected with the prior year merger that closed on November 4, 2024.
Changes in Comprehensive Income
The $100 million increase in comprehensive income from the Prior Quarter is attributed to a $74 million favorable change in currency translation and a $26 million increase in net income. Currency translation changes are primarily related to non-U.S. subsidiaries with a functional currency other than the U.S. dollar, whereby assets and liabilities are translated from the respective functional currency into U.S. dollars using period-end exchange rates. The change in currency translation in the Quarter was primarily attributed to locations utilizing the Euro and Brazilian real as their functional currency. As part of its overall risk management, the Company uses derivative instruments to reduce foreign currency exposure to translation of certain foreign operations. The Company records changes to the fair value of these instruments in Accumulated other comprehensive loss. The change in fair value of these instruments in the current quarter is primarily attributed to the change in the forward foreign exchange curves between measurement dates.
Segment Overview
Americas
| Quarter | Prior Quarter | $ Change | % Change | ||||||||||||
|
Net sales
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$ | 440 | $ | 420 | $ | 20 | 5 | % | |||||||
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Adjusted EBITDA
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58 | 56 | 2 | 4 | % |
Net sales: The net sales increase included a 2% organic volume growth, revenue
from the prior year merger of $42 million and favorable foreign currency changes of $8
million that were partially offset by a $38 million
decrease in selling prices primarily due to the pass-through of lower raw
material costs and competitive pressures from imports in South America.
Adjusted EBITDA: The adjusted EBITDA increase included a contribution from the prior year merger of $5 million and
improved organic growth in North America partially offset by unfavorable
impacts from price cost spread of $4 million.
15
Rest of World
| Quarter | Prior Quarter | $ Change | % Change | ||||||||||||
|
Net sales
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$ | 352 | $ | 282 | $ | 70 | 25 | % | |||||||
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Adjusted EBITDA
|
35 | 28 | 7 | 25 | % |
Net sales: The net sales increase included revenue from the prior year merger of $70 million
and a $28 million favorable impact from foreign currency changes partially
offset by a 5% organic volume decline which was primarily attributed to general
market softness in Europe and a $14 million decrease in selling prices
primarily due to the pass-through of lower raw material costs.
Adjusted EBITDA: The adjusted EBITDA increase included a contribution from the prior year merger of $3
million and favorable impacts from price cost spread of $4 million as the
result of synergy realization and mix improvement.
Liquidity and Capital Resources
Senior Secured Credit Facility
We manage our global cash requirements considering (i) available funds among the many subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances. At the end of the Quarter, the Company had no outstanding balance on its asset-based revolving line of credit that matures in November 2029. The Company was in compliance with all covenants at the end of the Quarter.
Cash Flows
Net cash from operating activities increased $60 million from the Prior Quarter primarily related to higher net loss and working capital uses in Prior Quarter.
Net cash from investing activities decrease of $36 million from the Prior Quarter primarily attributed to cash acquired in connection with the merger in Prior Quarter.
Net cash from financing activities decreased $60 million from Prior Quarter primarily attributed to $27 million prepayment of debt in the Quarter paired with proceeds from borrowings netted with transfers to parent
in the Prior Quarter.
Free Cash Flow
Our consolidated free cash flow for the Quarter are summarized as follows:
| December 27, 2025 | |||
| Cash flow from operating activities | $ | 2 | |
| Additions to property, plant and equipment | (15 | ) | |
| Free cash flow | $ | (13 | ) |
Liquidity Outlook
At December 27, 2025, our cash balance was $264 million, which was primarily located outside the U.S. We believe our existing U.S. based cash and cash flow from U.S. operations, together with available borrowings under our senior secured credit facilities, will be adequate to meet our short-term and long-term liquidity needs with the exception of funds needed to cover all long-term debt obligations, which we intend to refinance prior to maturity. The Company has the ability to repatriate the cash located outside the U.S. to the extent not needed to meet operational and capital needs without significant restrictions.
16
Interest Rate Risk
We are exposed to market risk from changes in interest rates primarily through our senior secured credit facilities and accounts receivable supply chain financing programs. Our senior secured credit facilities are comprised of (i) $706 million term loan and (ii) the $350 million revolving credit facility with no borrowings outstanding. Borrowings under our senior secured credit facilities bear interest at a rate equal to an applicable margin plus SOFR. The applicable margin for SOFR rate borrowings under the revolving credit facility ranges from 1.50% to 2.00%, and the margin for the term loan is 4.25% per annum. As of period end, the SOFR rate of approximately 3.82% was applicable to the term loan. A change of 0.25% on these floating interest rate exposures would increase our annual interest expense by approximately $2 million.
Foreign Currency Risk
As a global company, we face foreign currency risk exposure from fluctuating currency exchange rates, primarily the U.S. dollar against the Euro, British pound sterling, Argentine peso, and Brazilian real. Significant fluctuations in currency rates can have a substantial impact, either positive or negative, on our revenue, cost of sales, and operating expenses. Currency translation gains and losses are primarily related to non-U.S. subsidiaries with a functional currency other than U.S. dollars whereby assets and liabilities are translated from the respective functional currency into U.S. dollars using period-end exchange rates and impact our Comprehensive income. A 10% decline in foreign currency exchange rates would have had an $8 million favorable impact on our Net income for the quarterly period ended December 27, 2025. See Note 6. Financial Instruments and Fair Value Measurements.
(a) Evaluation of Disclosure Controls and Procedures.
Under applicable SEC regulations, management of a reporting company, with the participation of the principal executive officer and principal financial officer, must periodically evaluate the company’s “disclosure controls and procedures,” which are defined generally as controls and other procedures of a reporting company designed to ensure that information required to be disclosed by the reporting company in its periodic reports filed with the SEC (such as this Form 10-Q) is recorded, processed, summarized, and reported on a timely basis.
As reported in our 2025 Annual
Report on Form 10-K, Magnera's management concluded that its internal control
over financial reporting and its disclosure controls and procedures were not
effective as of September 27, 2025. This conclusion was specifically
impacted by deficiencies in the design and operating effectiveness as well as
the level of observable control documentation of our internal controls related
to the merger that closed on November 4, 2024, as well as information
technology general controls related to legacy U.S. IT systems that are under a
transition services agreement. As there were no material errors in the accounting or
adjustments to the Consolidated and Combined Financial Statements as a result of these
identified deficiencies, management concluded that there was no impact on
Magnera's prior or current period Consolidated and Combined Financial Statements and that
Magnera's financial statements were presented fairly in all material
respects. Since September 27, 2025, Magnera's management has taken
remedial actions, and in that regard, has allocated resources internally that
we believe will allow us to accelerate remediation.
The Company's management, with
the participation of the Chief Executive Officer and the Chief Financial
Officer, carried out an evaluation of the effectiveness of the design and
operation of the disclosure controls and procedures as of December 27, 2025.
Because many of the controls related to IT systems are connected with conversions that will occur throughout the fiscal year, management has concluded that our disclosure
controls and procedures were not effective as of the last day of the period
covered by this report.
(b) Changes in internal control over financial reporting.
Except as set forth above, there were no
material changes in our internal control over financial reporting that
occurred during the quarter ended December 27, 2025 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
17
See the discussion of legal proceedings contained in Note 9. Contingencies and Commitments to our unaudited Consolidated and Combined Financial Statements in Part I, Item 1 of this report, which is incorporated herein by reference.
Before investing in our securities, we recommend that investors carefully consider the risks described in our annual reports on Form 10-K and any subsequent periodic reports filed with the SEC. Realization of any of these risks could have a material adverse effect on our business, financial condition, cash flows and results of operations.
We caution readers that the list of risk factors discussed in our SEC filings may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact occur. Accordingly, readers should not place undue reliance on those statements.
18
The following exhibits are filed or furnished herewith or incorporated by reference as indicated.
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Incorporated by reference to
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31.1*
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Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
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31.2*
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Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
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32.1**
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Section 1350 Certification of the Chief Executive Officer.
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32.2**
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Section 1350 Certification of the Chief Financial Officer.
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101.INS
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data file because its iXBRL tags are embedded within the Inline XBRL document.
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101.SCH
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Inline XBRL Taxonomy Extension Schema.
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101.CAL
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Inline XBRL Extension Calculation Linkbase.
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101.DEF
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Inline XBRL Extension Definition Linkbase.
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101.LAB
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Inline XBRL Extension Label Linkbase.
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101.PRE
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Inline XBRL Extension Presentation Linkbase.
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104
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Cover Page Interactive Data File (formatted as an inline XBRL and contained in Exhibit 101).
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* Filed herewith
** Furnished herewith
19
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Magnera Corporation
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| February 5, 2026 |
By:
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/s/ James M. Till
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James M. Till
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Chief Financial Officer
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20