Where does it say this? How about this?
818 “However, one cannot charge with the sin of the separation those who at present are born into these communities [that resulted from such separation] and in them are brought up in the faith of Christ, and the Catholic Church accepts them with respect and affection as brothers . .
.. All who have been justified by faith in Baptism are incorporated into Christ; they therefore have a right to be called Christians, and with good reason are accepted as brothers in the Lord by the children of the Catholic Church.”
Also check out
Unitatis Redintegratio (Decree on Ecumenism) from Vatican II. (Actually paragraph 818 refences this document specifically paragraph 3)
I will add that in my reading of the Catechism I find no distinction made between formal and material schismatics.
Those words appear no where in the Catechism. Can you point me to the section where this distinction you speak of is found? I know others have made this claim but I have yet to find it.