Mativ Holdings, Inc.MATV
Mativ Holdings, Inc. Income Taxes Disclosure
Income Taxes
For financial reporting purposes, loss before income taxes includes the following components (in millions):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. | $ | (349.1) | $ | (92.8) | $ | (256.9) | |||||||||||
| Foreign | (113.9) | 13.9 | (224.0) | ||||||||||||||
| Total | $ | (463.0) | $ | (78.9) | $ | (480.9) | |||||||||||
An analysis of the expense (benefit) for income taxes from continuing operations follows (in millions):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current income taxes: | |||||||||||||||||
| U.S. federal | $ | (2.2) | $ | 0.8 | $ | (13.5) | |||||||||||
| U.S. state | 0.9 | (2.1) | (2.3) | ||||||||||||||
| Foreign | 5.8 | 7.0 | 18.8 | ||||||||||||||
| 4.5 | 5.7 | 3.0 | |||||||||||||||
| Deferred income taxes: | |||||||||||||||||
| U.S. federal | (14.6) | (27.9) | (5.7) | ||||||||||||||
| U.S. state | (8.9) | (0.5) | 0.9 | ||||||||||||||
| Foreign | (106.6) | (7.5) | 28.6 | ||||||||||||||
| (130.1) | (35.9) | 23.8 | |||||||||||||||
| Total | $ | (125.6) | $ | (30.2) | $ | 26.8 | |||||||||||
A reconciliation of income taxes computed at the U.S. Federal statutory income tax rate to the expense for income taxes for the year ended December 31, 2025 in accordance with ASU 2023-09 was as follows (in millions):
| Years Ended December 31, | ||||||||||||||
| 2025 | ||||||||||||||
| Amount | Percent | |||||||||||||
Tax Provision at U.S. Statutory Rate | $ | (97.2) | 21.0 | % | ||||||||||
State and Local Income Taxes, Net of Federal Income Tax Effect (1) | (6.2) | 1.3 | ||||||||||||
| Foreign Tax Effects | ||||||||||||||
United Kingdom | ||||||||||||||
Changes in valuation allowances(2) | 12.0 | (2.6) | ||||||||||||
| Other | 1.1 | (0.2) | ||||||||||||
Foreign income tax rate differential | (0.7) | 0.2 | ||||||||||||
Germany | ||||||||||||||
| Goodwill impairment | 16.1 | (3.5) | ||||||||||||
| Other | (1.4) | 0.3 | ||||||||||||
Foreign income tax rate differential | (4.4) | 1.0 | ||||||||||||
| Enacted changes in tax laws or rates | (8.3) | 1.8 | ||||||||||||
Luxembourg | ||||||||||||||
| Enacted changes in tax laws or rates | 9.8 | (2.1) | ||||||||||||
| Other | (0.2) | — | ||||||||||||
Foreign income tax rate differential | (0.9) | 0.2 | ||||||||||||
Changes in valuation allowances(2) | (109.9) | 23.7 | ||||||||||||
| Other foreign jurisdictions | ||||||||||||||
| Goodwill impairment | 4.4 | (1.0) | ||||||||||||
| Other | 2.0 | (0.4) | ||||||||||||
| Foreign income tax rate differential | (0.6) | 0.1 | ||||||||||||
Effect of Cross-Border Tax Laws | ||||||||||||||
| Branch Earnings | 1.7 | (0.4) | ||||||||||||
| Other | 0.3 | (0.1) | ||||||||||||
Income from passthrough entities | (3.3) | 0.7 | ||||||||||||
| Tax Credits | ||||||||||||||
| General | (0.4) | 0.1 | ||||||||||||
| Foreign Branch | (1.8) | 0.4 | ||||||||||||
| Research & Development Credit | (2.7) | 0.6 | ||||||||||||
Changes in Valuation Allowances(2) | 45.6 | (9.8) | ||||||||||||
| Nontaxable or Nondeductible Items | ||||||||||||||
| Goodwill Impairment | 8.1 | (1.7) | ||||||||||||
| Other | 2.9 | (0.6) | ||||||||||||
| Changes in Unrecognized Tax Benefits | 5.3 | (1.1) | ||||||||||||
| Other Adjustments | 3.1 | (0.8) | ||||||||||||
| Provision for income taxes | $ | (125.6) | 27.1 | % | ||||||||||
(1)California, Wisconsin, Minnesota, and Illinois represent the majority of the tax effect in this category.
(2)The 2025 increase in the valuation allowance in the UK is a result of changes in estimates of future taxable income. The 2025 increase in the valuation allowance in the U.S. is a result of the current year change to a net deferred tax asset position. The 2025 decrease in the valuation allowance in Luxembourg is a result of implemented planning actions that generate objective taxable income.
A reconciliation of income taxes computed at the U.S. Federal statutory income tax rate to the expense for income taxes for the years ended December 31, 2024 and 2023 were as follows (in millions):
| Years Ended December 31, | ||||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | |||||||||||||||||||||||
| Tax provision at U.S. statutory rate | $ | (16.6) | 21.0 | % | $ | (101.0) | 21.0 | % | ||||||||||||||||||
| Foreign income tax rate differential | (3.7) | 4.7 | 3.3 | (0.7) | ||||||||||||||||||||||
Income from pass-through entities | 1.8 | (2.3) | 1.9 | (0.4) | ||||||||||||||||||||||
| Branch earnings | 2.2 | (2.8) | 1.4 | (0.3) | ||||||||||||||||||||||
| Global intangible low tax inclusion | 3.4 | (4.3) | 3.5 | (0.7) | ||||||||||||||||||||||
| Subpart F income | — | — | — | — | ||||||||||||||||||||||
| Foreign derived intangible income | 2.4 | (3.0) | (0.3) | 0.1 | ||||||||||||||||||||||
| State income tax, net of federal benefit | (2.5) | 3.2 | (0.6) | 0.1 | ||||||||||||||||||||||
| Adjustments to valuation allowances | (4.7) | 6.0 | 50.8 | (10.6) | ||||||||||||||||||||||
| Capital loss carryforward | — | — | — | — | ||||||||||||||||||||||
| Transition tax | — | — | — | — | ||||||||||||||||||||||
| Other tax credits | (3.2) | 4.1 | (3.5) | 0.7 | ||||||||||||||||||||||
| Foreign tax credits | (2.0) | 2.5 | (7.4) | 1.5 | ||||||||||||||||||||||
| Other foreign operational taxes | 0.7 | (0.9) | 1.8 | (0.3) | ||||||||||||||||||||||
| Base erosion minimum tax amount | — | — | — | — | ||||||||||||||||||||||
| Domestic production deduction | — | — | — | — | ||||||||||||||||||||||
| Remeasurement of deferred taxes due to tax law | 1.1 | (1.4) | (0.3) | 0.1 | ||||||||||||||||||||||
| Non-deductible compensation expense | 0.5 | (0.6) | 0.9 | (0.2) | ||||||||||||||||||||||
| Non-deductible acquisition expense | — | — | (0.5) | 0.1 | ||||||||||||||||||||||
| Goodwill impairment | — | — | 84.5 | (17.6) | ||||||||||||||||||||||
| Uncertain tax positions | (5.8) | 7.4 | (4.2) | 0.9 | ||||||||||||||||||||||
| Worthless stock deduction | (4.6) | 5.8 | — | — | ||||||||||||||||||||||
| Other, net | 0.8 | (1.1) | (3.5) | 0.7 | ||||||||||||||||||||||
| Provision for income taxes | $ | (30.2) | 38.3 | % | $ | 26.8 | (5.6) | % | ||||||||||||||||||
A benefit for income taxes of $125.6 million, a benefit for income taxes of $30.2 million and an expense for income taxes of $26.8 million in the years ended December 31, 2025, 2024, and 2023, respectively, resulted in an effective tax rate of 27.1%, 38.3%, and (5.6)% in 2025, 2024, and 2023, respectively. The Company’s effective tax rates differ from the statutory federal income tax rate of 21.0% due primarily to varying tax rates in foreign jurisdictions, the relative amounts of income we earn in those jurisdictions, non-deductible goodwill impairment, adjustments to valuation allowances, uncertain tax positions, and worthless stock deduction.
Prior to the passage of the Tax Cuts and Jobs Act of 2017 ("Tax Act"), the Company asserted that substantially all of the undistributed earnings of its foreign subsidiaries were considered indefinitely reinvested and accordingly, no deferred taxes were provided. Due to the Tax Act, the Company has significant earnings and profits from its foreign subsidiaries that it can generally repatriated free of U.S. federal tax. As a result of the Company’s treasury policy to simplify and expedite its intercompany cash flows, as evidenced by the use of cash pooling, and in light of the Company’s prioritization of debt reduction and funding future growth, the Company does not assert indefinite reinvestment to the extent of each controlled foreign corporation's earnings and profits and to the extent of any foreign partnership’s U.S. tax capital accounts. As a result, the Company has provided for non-U.S. withholding
taxes, U.S. federal tax related to currency movement on previously taxed earnings and profits, and U.S. state taxes on unremitted earnings.
Additionally, the Organization for Economic Cooperation and Development (“OECD”) has reached agreement on an approach to establish a minimum global tax, set at 15%, for large multi-national enterprises, such as the Company. The OECD has recommended that certain aspects of this approach, referred to as “Pillar Two”, be made effective beginning in 2024, and many jurisdictions in which the Company operates have implemented Pillar Two legislation or are considering implementation. While such new rules introduce complexity into the Company’s tax calculations, Pillar Two in 2025 is limited to $1.2 million of qualified domestic minimum top-up tax ("QDMTT") in a jurisdiction where the Company's jurisdictional effective tax rate is less than 15%. Due to the novelty and complexity of Pillar Two, the Company continues to monitor for advancements and further guidance on Pillar Two rules, considering impacts of such developments on its tax expense.
Income taxes paid, net of (refunds received), were as follows (in millions):
| Years Ended December 31, | ||||||||
| 2025 | ||||||||
| U.S Federal | $ | (2.2) | ||||||
| U.S. State and local | ||||||||
| South Carolina | (1.8) | |||||||
Other | (1.5) | |||||||
| Foreign | ||||||||
| Germany | 8.6 | |||||||
| Spain | 3.2 | |||||||
| China | 2.0 | |||||||
| Canada | 1.5 | |||||||
| Luxembourg | 1.1 | |||||||
Other | 0.6 | |||||||
| Total cash paid during the period for income taxes | $ | 11.5 | ||||||
Net deferred income tax assets (liabilities) were comprised of the following (in millions):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred Tax Assets | |||||||||||
| Receivable allowances | $ | 1.2 | $ | 1.4 | |||||||
| Postretirement and other employee benefits | 11.0 | 7.5 | |||||||||
| Net operating loss and tax credit carryforwards | 343.6 | 313.3 | |||||||||
| Capital loss carryforward | 28.8 | 33.6 | |||||||||
| Investment in subsidiaries | — | 1.8 | |||||||||
| Capitalized research & development | 41.3 | 45.3 | |||||||||
| Section 163(j) interest limitation | 4.2 | 15.6 | |||||||||
| Right of use liabilities | 16.9 | 17.4 | |||||||||
| Other | 18.0 | 15.6 | |||||||||
| 465.0 | 451.5 | ||||||||||
| Less: Valuation allowance | (258.7) | (286.1) | |||||||||
| Net deferred income tax assets | $ | 206.3 | $ | 165.4 | |||||||
| Deferred Tax Liabilities | |||||||||||
| Net property, plant and equipment | $ | (73.4) | $ | (83.2) | |||||||
| Intangibles | (60.7) | (132.3) | |||||||||
| Investment in subsidiaries | (7.2) | — | |||||||||
| Derivatives | (9.2) | (13.8) | |||||||||
| Right of use assets | (16.1) | (16.3) | |||||||||
| Reserves and accruals | (2.6) | (2.7) | |||||||||
| Foreign currency translation | (7.2) | (9.5) | |||||||||
| Other | (0.8) | (0.8) | |||||||||
| Net deferred income tax liabilities | $ | (177.2) | $ | (258.6) | |||||||
Total net deferred income tax assets (liabilities) | $ | 29.1 | $ | (93.2) | |||||||
As of December 31, 2025, the Company had approximately $286.8 million of tax-effected operating loss carryforwards available to further reduce future taxable income in various jurisdictions, with the following expiration dates:
| 2025 | |||||
| 2026-2045 | $ | 188.3 | |||
| Indefinite | 98.5 | ||||
| Total | $ | 286.8 | |||
In addition, the Company has $28.8 million of tax effected capital loss carryforwards, of which $20.4 million will expire in 2026 and $8.4 million are indefinite lived. The Company also has $22.3 million, $26.2 million, and $8.3 million of foreign, U.S. federal research and development, and U.S. state tax credits that will expire between 2028 – 2035, 2034 – 2045, and 2025 – 2045 respectively.
The Company's deferred tax asset valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on tax loss, capital loss, and credit carryforwards. The valuation allowance on deferred tax assets as of December 31, 2025, is substantially in the United States federal, state, and Luxembourg, of $81.7 million, $23.3 million, and $119.5 million, respectively.
The Company's assumptions, judgments and estimates relative to the valuation of these net deferred tax assets take into account available positive and negative evidence of realizability, including recent financial performance, the ability to realize benefits of restructuring and other recent actions, projections of the amount, source, and character of future taxable income and tax planning strategies. Actual future operating results could differ from the Company's current assumptions, judgments and estimates. The Company believes that it will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets.
The following table summarizes the activity related to the Company's unrecognized tax benefits related to income taxes (in millions):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Uncertain tax position balance at beginning of year | $ | 23.7 | $ | 20.0 | $ | 19.9 | |||||||||||
Increases in current year tax positions | 6.2 | 5.4 | 0.6 | ||||||||||||||
Increases in prior year tax positions | 1.2 | 5.2 | 4.4 | ||||||||||||||
Decreases due to lapse of statute of limitations | (1.9) | (5.6) | (2.4) | ||||||||||||||
Decreases due to settlements | (0.7) | (1.3) | (2.1) | ||||||||||||||
Increases (decreases) from business acquisitions | — | — | (0.4) | ||||||||||||||
| Uncertain tax position balance at end of year | $ | 28.5 | $ | 23.7 | $ | 20.0 | |||||||||||
The liability for unrecognized tax benefits includes $19.5 million as of December 31, 2025 that if recognized would impact the Company's effective tax rate. The Company has $9.0 million of fully reserved deferred tax assets within the uncertain tax positions. The Company's policy with respect to penalties and interest in connection with income tax assessments or related to unrecognized tax benefits is to classify penalties as provision for income taxes and interest as interest expense in its Consolidated Statements of Income (Loss).
The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign jurisdictions. The company has completed the 2020 U.S. audit with no tax adjustments to record. The company is under U.S. audit for tax year 2023 and anticipates finalizing this audit during 2026. The 2015-2025 tax years remain subject to examination by other major tax jurisdictions.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.