Q&A. If you do have any questions at any point during the presentation, please feel free to type those questions into the box, and time permitting, we will get to as many as we can. But again, thank you for being here, and please join me in welcoming Magnera. With that, Robert Weilminster, I'll hand it back to you. Thank you so much.
Great. Thanks, Daniel. We're gonna go ahead and flip off the video here. We'll turn the video back on, when we're done with the presentation, just so everybody can see the full screen here. Again, just echoing Daniel's comments, thank you for joining us this morning. Thank you for your interest in Magnera. It's our pleasure to be able to talk to you about the company and walk through some quick overview slides, and then we'll open it up for Q&A. We've already had some one-on-ones this morning. They've been great, very engaging, lot of great questions. You know, hopefully during the presentation and the Q&A session, we'll try and cover as many of those as we can for you. Magnera, just real quick here.
You know, I've got to throw the slide up, make sure I keep our in-house counsel happy. Not gonna go through this. I won't read it. You know, the biggest thing is, I think as I answer questions, our practice has been, you know, we'll talk about guidance for the full year. We don't talk about quarterly guidance, but that would be the main thing I would call out here, and hopefully I won't say anything that anybody comes back and challenges me on. Again, Magnera, hopefully most of you are at least familiar with the Magnera name. If you're not, there is a basis behind the name. Magnera stands for Magnificent New Era in specialty materials.
We worked with some outside consultants to help us come up with the name before we stood the company up in November of 2024, for those of you that remember, Magnera being the combination of the HH&S division of Berry Global and Glatfelter. We are a global leader in the manufacturing and, you know, providing specialty nonwoven and film materials to our customers across, you know, key end markets, which is really important. I'll talk about that as I go through the slides. You know, focused on, you know, six key end markets, very critical. The materials that we manufacture are essential. They are mission critical, we like to say, in regards to the products that our customers use our materials in to produce, that consumers use every day, you know, in different applications, and I'll talk through that.
We have a global footprint. We think that's very important in regards to continuity of supply for our customer base. For those of you that I talked to last year during the time of around Liberation Day, you know, we talked about tariffs and said, "Hey, our strategy is to procure our raws locally, to produce locally, to sell locally." That global footprint enables us to do that. It's also really important today as, you know, we deal with some of the ramifications of the conflict going on in the Middle East. Most importantly, that global footprint is close to where our customers are and enables us to meet their expectations from a continuity of supply standpoint and, you know, managing risk in regards to that continuity of supply.
The third pillar on this slide is our innovation capabilities. We were very fortunate to be able to combine the two companies and stand up Magnera. The human capital that came in the merger is world-class, globally leading in the industry space, and we're leveraging that human capacity in regards to engaging with our customers to make sure that we're at the front end of conversations as they think about how our innovative portfolio of products and how we can leverage what is the broadest platform of technologies in nonwovens, olefin-based and pulp and fiber-based, in order to meet their needs as they think about modifying their end products to grow in the marketplace, which brings us right along with them to grow as they grow. Moving to the next slide. Just a couple highlights.
Again, as we put together Magnera, you know, our purpose, promise, and beliefs are extremely important. A company is built on people. We've integrated the company. The integration's gone extremely well from a culture standpoint. You know, the goal, going back to, you know, our legacy experience with a lot of acquisition activities in it, going back to Legacy Berry is, you know, hopefully one plus one equals more than two. People enable you to do that. Our integration process is extremely collaborative, and the talent that came together in Magnera has executed and exceeded in regards to us being able to deliver on our expectations there. From an integration standpoint, the dust is settled. That is behind us. You know, we continue to focus on synergy capture, which I'll talk about towards the end of the presentation.
Other initiatives which you've heard us talk about, through our earnings calls and that, with respect to our global footprint coming out of integration, Project CORE I'm alluding to, and I'll talk about that also. Empowerment, engaging our people to drive via their passion, their curiosity, to make sure that our customers understand our ability to positively impact their business with the products that we make every day, is who Magnera is. We've got a great team around the world that enables us to do that. The last point on here that I would be remiss if I didn't call out was safety and quality, right? Those are part of our DNA.
You take care of yourself, you take care of the equipment that you're producing product on, you make sure that the product meets the quality expectations of our customers, and everybody's extremely happy at the end of the day. Those are pillars that not only run through our manufacturing facilities, but just how we think about the way we run our business and taking care of our people and our customers, which is extremely important and resonates with our customers every day. Just some facts, some data points in regards to Magnera. 1,000 customers around the world. We talked about the 45 plants, pretty evenly balanced between the Americas and rest of world, Europe, Asia, as you can see, based on the black dots on the map.
8,500 employees across the globe and, you know, we service customers in 100+ countries. The way that breaks down is 53% of our revenue is in the Americas, 47% is in rest of world, so pretty balanced. From a data point, in regards to our customers, you know, I've talked, and those of you that have heard me speak before, you know, you hear the word sticky a lot. I like to use the word entangled in regards to our customer relationships. You can see the data point there that just the tenure of our relationship, our top customers, 20+ years on average or more.
We have a broad portfolio of intellectual property and beyond that, we also have a lot of know-how and proprietary know-how that we use in producing our products, taking our machines from our suppliers and modifying them and putting the improvements in place that we know create differentiating products. That's extremely important. I alluded to safety earlier, but you know, when we measure safety, we measure it not only in our internal performance, but we measure it against our peers and OSHA rates that we have access to, and we are in the top quartile in regards to how we perform from a safety standpoint. Love this slide. I think it's a really good recap in regards to talking about Magnera in the primary six end markets.
you know, first of all, when you take a look at the pies and how our business breaks down, we put a lot of thought into how to present Magnera when we stood up the company. 53% of our revenue is in consumer solutions, $1.8 billion of the $2.3 billion, and 47%, $1.5 billion is in personal care. both sides of that pie are extremely important to us and you know, represent significance in regards to Magnera and our end customers. On the consumer solutions side, you can see you know, how these six end markets represent the total 100% of our revenue. You know, wipes is a significant portfolio, which we are extremely bullish on in regards to the combination.
You know, the legacy business on the Berry side was significant in hard surface disinfecting, with key customers around the globe, like Clorox, Reckitt Benckiser, major converters of wipes that go into the, you know, big retailers like Walmart and Target. The combination of the two companies really has created the broadest portfolio. Our wipes, you know, we go into surface disinfecting, we go into baby and personal care and beauty, we go into industrial and institutional. The breadth of our wipes portfolio and the technology platforms we use, we believe is the broadest, in the competitive set around the globe. Infrastructure is a really interesting end market for us. We manufacture Typar housewrap.
When you're looking at new communities that are going up or people that are doing renos on their homes, you'll see, you know, housewrap being used. We're Typar. The other guys are Tyvek. If you have a project, please make sure you use Typar in regards to reno-ing or building a new home. We've expanded off our Typar product line with a lot of ancillary bolt-ons, roofing underlayment, window flashing. It's a great brand, great recognition in regards to the performance of that product. You know, we continue to see growth there and are looking forward to housing starts moving in a more positive direction. You know, we're well-positioned in that space and have great relationships with the distributors that sell those products around the country in North America.
We also talk about, and we've talked about it on other earnings calls, electrification, our cable wrap products, you know, sound barrier for automotive. There's a lot of different niches that sit inside infrastructure which are really important and serve a lot of end markets, with, again, mission-critical products they need to produce those end application products. Home food and bev, also extremely important, 16% of our total revenue. We are the largest manufacturer of the media that's used for tea bags around the globe, with a great list of customers. We also make the filter media that goes into K-Cups for single-use coffee. You know, we've got our floor and laundry. We're a major manufacturer and supplier into the dryer sheet space, so Bounce dryer sheets.
If you use those, make sure you throw more than one in your dryer so that you're consuming as many as possible. Big footprint for us in home food and bev, and you can see some of the applications there, including premium tabletop. High-end tablecloths, things like that you would use in you know convention events and things like that. On the personal care side, you know you got baby, adult, and healthcare, the three primary end markets there. You know, the call-outs, you know, we talk about baby a lot, but we have a significant footprint across all three end markets there. You know, one of the call-outs there, as you can see, is baby, 20%, adult incontinence, 19%. Those numbers would have been very different 10 years ago.
Adult incontinence continues to grow. Growth rates around the globe, depending on what region of the world you're in, you know, 4%-7%. We've been able to leverage our know-how, the product expertise, if you can imagine, right? The materials that we make going up against a baby's skin are some of the most important in the world. You know, taking that know-how and putting it into adult incontinence products as those articles have become more accepted. There's been a demand for discretion in how those articles are worn, their performance.
Taking all the know-how that we had in making, you know, some of the most complex engineered baby diapers in regards to the materials that our customers convert into the diaper, supplying those same materials to the customers that are making adult incontinence products is a great end market for us. Healthcare extremely important. If you know look into a surgical suite, you see the materials like in the picture here, blue, green. We make those substrates, those nonwoven fabrics that our customers like Cardinal Health, Medline, Owens & Minor convert into surgical suite articles, gowns, drapes, hoodies, back table cover. Really important end market for us in a market that we continue to focus on supporting with innovation. The next slide and this is a great slide.
You know, pictures are worth a thousand words in regards to just some of what I communicated. You know, this is where the rubber really meets the road, and you talk about why Magnera and the materials that we make. Our materials are in these end products. These end products consumers use every day. They're essential. People need them in order to live their lives the way that they do and have become accustomed to. I talked about wipes. You can see some of the major customers. Again, the pictures, anything from a Clorox disinfecting wipe to the Dude Wipes out on the end, which are growing like wildfire as far as market adoption. Then you've got some of our institutional industrial products in the middle there.
Bev, you know, I alluded to our major global customers and some of the end products and applications there. Basically, you know, if you walked into a retailer and you looked at the shelf, we like to say we look like the shelf, right? So we sell to the branded, we sell to the store, we sell to the converters that, you know, are supporting private label. So our products are on all three levels of the shelf, which is extremely important, in regards to, you know, some of the dynamics that are going on right now. As consumers are looking at their spend and, you know, maybe they're pivoting up and down on the shelf, our materials are on all three levels of the shelf.
You know, I talked about infrastructure and a lot of the end applications that we touch there. The point again I want to emphasize here is that there is breadth in the diversification of our portfolio and where our nonwovens and film materials go, which is extremely important in regards to the growth of Magnera moving forward. Real quick here, I talked about healthcare. We're very excited about, you know, we developed, we have the intellectual property, the proprietary on a performance treatment that actually is used in the materials that go onto our substrate to make gowns and other materials that go into the surgical suite. The key here is that these are our formulation, our chemistry intentionally does not include PFAS, which, you know, is extremely important. We talked about this on the last earnings call.
We're already in this space today. We see this as a $100 million opportunity to grow our footprint in gowns. This treatment is extremely important. If a surgeon or a nurse is wearing a gown, this is what causes the biologics in that to hit the gown and to not penetrate it, but to, you know, stay on the surface of the gown and not come through it. Very excited about this development. Strategic pillars, you know, I alluded to earlier. I mean, if we were having this conversation last year, we talked about, you know, stabilize, optimize, grow in regards to our focus in year one. We have stabilized. We continue to optimize through Project CORE.
Really focused on growing the nature of our competitive footprint I alluded to, making sure that we're the most cost competitive at our locations in the markets we serve around the globe. From a leadership standpoint, driving product leadership with our know-how and making sure that we're in front of our customers with products they need every day and they want to grow their product offerings. Making sure that we have the best team in the world, the best systems, the best processes to deliver on full value with respect to the advantages that we bring to our customers set in the end markets. We feel very positive in regards to where we are on that journey. A little bit here as we get towards the end.
From a guidance standpoint, for those of you that have, you know, been on our earnings calls, our 2026 guidance, you know, EBITDA range of $380 million-$410 million. As a benchmark, we finished last year at FY 2025 at $362 million. Free cash flow midpoint of $100 million. Then capital expenditures of $80 million, $70 million focused on running our business, our plants, making sure that they meet the expectations, you know, safety, performance, quality, and keeping our machines running at, you know, where they need to be. Then $10 million focused on costs for IT to separate from the Amcor Berry TSA and stand up our own ERP system. Still running the business with CapEx in the 2%-2.5% sales range.
We feel very comfortable with that. We demonstrated that last year. You know, that's where we are until we see opportunities that would require new capacity, you know, via growth, expansion, new equipment, and that would be something we would do when the markets support that. Then just a couple snapshots, you know, to what's that look like, right? What's that mean? What's Magnera delivering? Well, if that 2026 guidance is a 9% earnings growth on our prior year results of $362 million in EBITDA, like I mentioned. Free cash flow, $97 million. Trailing twelve months, $100 million is our guide for 2026. Again, our focus on that free cash is to pay down debt with the goal of getting to 3x.
A number which, you know, we continue to actively communicate, we think it's extremely important, and we've demonstrated our ability, you know, from a cash flow yield to pay down debt, as you know, 27% based on our market cap of March sixth is a measure of free cash to market cap. With that, I know I blew through a lot there in 20 minutes, but I wanna make sure that we leave enough time for Q&A, and we'll loop Daniel back in. Again, appreciate everybody spending time here with us this morning and giving me the opportunity to give you a quick overview on Magnera. Hopefully, as you think about what's in front of you every day, that we're at the top of your list in regards to investing in MAGN.
That was excellent, Robert. Thank you so much. As a reminder, we do have about 10 minutes here, so if you have any questions, feel free to type those into the box, and we should be able to get to just about all of them. Robert, just to kinda kick things off, can you provide a little bit of commentary about what you guys are seeing in the underlying demand environment, and any, you know, economic weakness maybe in Europe to the extent that you do discuss that and what you guys are really seeing from underlying organic growth volume?
Sure. Yeah, great question. Thanks, Daniel. From a guide standpoint in our 2026 guide, right, we talked about, you know, building that guide off of, you know, flattish volume based on how we see the macro today. Flattish has multiple things going on within it, right? You know, flattish within the regions. North America, we do see low single-digit positive growth. Europe, a little bit more challenged, so we'd say low single-digit negative growth, you know, more in the kind of the 3% range. South America, we spent a lot of time talking about South America and, you know, some of the challenges last year as it related to materials being dumped into South America and the impact on our business.
That really started about this time last year, so we're lapping that in the H2 as we've communicated publicly. Our outlook for the H2 is in line with how we built the guide, which was South America being flat from a volume standpoint in the H2 . Some of the actions we've taken down there are supporting that. You know, Asia, some of the flattish outlook. Nonwovens grow, right? That was one of the key thesis behind standing up Magnera. We still see that, right? Nonwovens provide an alternative, right? The evolution of nonwovens was a cost-effective solution for other materials to, you know, support the products that we support today that weren't as cost effective or weren't as consumer friendly or things along those lines. Nonwovens do grow.
you know, the macro, as we all know, you know, whether you're talking about specialty materials or chemicals or a lot of different, you know, industrial applications has been somewhat muted, in regards to end consumer and confidence. We do believe as that tide turns with the actions that were taken at Magnera with some of the footprint rationalization through CORE, Daniel, that we'll be in a really good position, in order to take advantage of stronger tailwinds from a macro growth standpoint.
You touched on a couple points there that I wanted to follow up on. You know, within looking at the last, the earnings release and the earnings transcript, when it comes to the macro environment, there's always a lot of discussion regarding destocking and restocking, but you guys tend to be very short cycle with your customers. Can you kinda just explain that to us and why that works to your benefit over time?
Sure. You know, from a macro standpoint. First of all, you know, destocking, you know, we saw that trend, right, post-COVID. You know, we all lived through that. We really don't like to talk about destocking. Yes, I mean, volumes ebb and flow with our customers, and it seems to be, you know, somewhere that everybody gravitates to. You know, our products are, like I said, essential. They're used every day. We're on, like I said in the presentation, on all levels of the shelf, you know, all different attributes. You know, I think, we're well-positioned in regards to our leadership around the globe, our footprint. I think I'm covering your question there, Dan.
Yeah.
Yeah.
Yeah.
We really do believe scale is important. I mean, scale is most important from a procurement standpoint, but scale in regards to where our plants are and how we support our customers, we don't really see destocking as a big of a challenge, more as just you know consumer confidence 'cause our products end up in end-use products that get consumed every day.
Perfect. That's very helpful. I believe you. Well, just taking a step back, can you talk a little bit about kind of where you are at right now from a leverage standpoint and how you prioritize debt reduction over the coming year versus, you know, potential other ways that you would exercise capital allocation priorities?
Sure. Yeah, we've been pretty clear. I mean, our focus is to generate free cash, to deliver on the guidance, and to pay down debt. Had the privilege and, you know, talked to investors all the time in regards to both equity and debt in regards to supporting Magnera. There's a general consensus that, you know, paying down debt is the most accretive to value. That is our focus. That will be continued. You know, right now our guidance, $100 million in free cash, will be focused on paying down debt with the goal of turning debt about a quarter turn a year to get to that three times target. Daniel, that's.
Perfect.
Yeah, that's the strategy.
Perfect. I, like you, I really like that slide that you spent a good amount of time on, you know, earlier on. You guys talk a lot about end markets, and I'm just curious if you'd kind of paint a picture for us of where you guys see the strongest potential for growth, you know, looking out over the longer term.
Yeah. Hopefully I wove that into, no pun intended, into some of my comments. You know, again, wipes in the portfolio, the end market impact we have in regards to the technology and the materials we produce, we remain very bullish on. Definitely the growth dynamics and the demographics supporting adult incontinence and the growth there. You know, the other attribute in those type of articles, and I know, you know, I did speak to, the know-how leveraging baby into those products is just the difference in the size of the end article, right? There's more material that gets used in an adult incontinence article, so we feel really good about that. Infrastructure, we have great products. We have great customer relationships, and to the distributors that are dealing with the builders and in that space.
Electrification, like we talked about, we do see that, you know, there's a lot of need for a lot of, you know, systems to be rebuilt, to be improved around the globe. A lot of the products that we make, whether it's, you know, in ground and soil control, things along those lines, you know, we see end market applications there that we remain positive on. You know, a lot of times people tend to gravitate to baby, and yes, you know, demographics and we're all, you know. I mean, that's gonna be something that, you know, challenges the globe in regards to way beyond Magnera. We do, and we really like the baby space. We have great products in there. We work with our customers to premiumize those products.
The breadth of the end markets, and that's why we keep re-emphasizing that as so important is, you know, baby is, you know, 20% of our overall revenue. There's end markets that represent 80%, and every one of those end markets has applications in it that, you know, we believe with our footprint, with our knowhow, and with our people and the products that we make give us a right to win and grow.
Perfect. That's really helpful. We've got just a little bit of time, like less than a minute left.
Sure.
I'd like to just kinda hand it back to you for any closing thoughts that you would like to leave the investor base with.
Yeah, no. I mean, first of all, again, I appreciate everybody taking the time to join us this morning. You know, for those of you that have been on the phone with us in the past, there's a ton of passion about Magnera and the opportunity we were given in standing up the company, you know, to produce the mission-critical products that we make, to take care of our customers and then more importantly, the end products that consumers use every day. We feel like we're well-positioned to grow the business in regards to driving innovation into the products that we make. You know, we know that the market is long from a supply-demand standpoint. That's improving. Nonwovens do grow. I will re-emphasize that.
We're being very disciplined and we think, you know, really good stewards of the space in regards to looking at our footprint and rationalizing where we think appropriate to make us as cost competitive as we need to be to win in the markets where we wanna win. We know that, you know, that you all have a lot of different companies that you take a look at, and you know, hopefully this has helped you in regards to thinking about Magnera as an investment. We're available to answer any other questions you may have. You know, more importantly, hopefully the time's been beneficial for you to understand who we are.
I'm happy to help with your homework and, you know, look forward to, you know, being able to look at our shareholders and, you know, hopefully see the participants on this call today on that list here sooner rather than later. How about that?
That's excellent. Thank you so much.
All right.
Robert Weilminster, thank you so much for being here and sharing Magnera's story. For those of you in the audience, thank you for your questions and your participation today. We hope everybody has a wonderful day, and again, thank you for attending this Sidoti Conference.
Thank you.
Bye, everyone.